The next best thing: Social presence and accountability's impact on auditor professional skepticism

Abstract

Audit fieldwork is shifting from the client site to remote environments due to generational preferences, budget restrictions, and health mandates as seen with the COVID‐19 pandemic. This may negatively impact professional skepticism without purposeful safeguards. Based in Social Presence Theory (SPT), our experiment uses Big 4 senior auditors to examine how the perceived level of social presence (high vs. low) influences an auditor's professional skepticism and how increasing one's feeling of accountability can increase auditor skepticism in a remote audit environment. We predict and find that auditors who feel a greater degree of social presence with their client are more skeptical. We also find that increasing an auditor's feelings of accountability can increase skepticism, and that increasing accountability in a low social presence environment can mitigate lower feelings of professional skepticism. This finding offers an effective and efficient method to help auditors remain skeptical in remote audit environments.

Public accountant professional skepticism behavior in improving audit quality: A path analysis

“…The implication is that auditors are motivated to maintain vigilance and adopt an inquisitive attitude to detect potential fraud or errors, knowing they are liable for the audit outcomes. These results align with prior studies (Sorensen & Ortegren, 2021;Endrawes et al, 2023;Hoos et al, 2019), suggesting that heightened accountability fosters professional skepticism by prompting auditors to mitigate biases and enhance cognitive effort. Notably, this contrasts with the findings of Kim and Trotman (2015), who found that novice auditors exhibit a more pronounced increase in skepticism under process accountability compared to experienced auditors.…”

“…The perceived level of social presence in the audit environment shapes auditor skepticism, with increased accountability leading to heightened skepticism over time (Sorensen & Ortegren, 2021;Kim & Trotman, 2015). Previous studies indicate that novice auditors exhibit a greater increase in professional skepticism compared to more senior auditors under conditions of process accountability (Kim & Trotman, 2014;Endrawes et al, 2023).…”

Cognitive dissonance and auditor professional skepticism

“…Individuals are likely to experience CD after a decision when they feel personally responsible for it and the ensuing (adverse) consequences (Cooper and Fazio, 1984;Collins and Hoyt, 1972;Sorensen and Ortegren, 2021). That is CD is also likely to increase with the level of personal responsibility (Cooper and Fazio, 1984).…”

Linking skeptical judgment with skeptical action: Consideration of client identification and professional commitment

“…Previously studied auditor attributes include selected individual differences / traits (Farag & Elias, 2012; Hurtt, 2010; Hurtt et al., 2012; Quadackers et al., 2014), experience (Brewster, 2012; Grenier, 2017; Payne & Ramsay, 2005; Rose, 2007), and motivation (Peecher et al., 2013; Rosman, 2011), among others. Aspects of the audit environment researched as antecedents of PS include the presence of supportive and goal‐focused feedback (Blix et al., 2021), social presence (Sorensen & Ortegren, 2021), partner emphasis on PS (Carpenter & Reimers, 2013), anticipated accountability (Sorensen & Ortegren, 2021), clients’ interpersonal styles (Eutsler et al., 2018), peer attitude (Ying et al., 2020), partner support style and team identity salience (Stevens et al., 2019), regulatory oversight (Hammersley et al., 2010; Piercey, 2011), perceived client integrity (Earley et al., 2010; Kerler & Killough, 2009; Robertson, 2010), client executives’ employment history with the audit firm, or a Big 4 firm (Favere‐Marchesi & Emby, 2018), and client complexity (Brewster, 2012; Tucker et al., 2003). Much of the prior research focused on skeptical judgments; however, as we describe in the next section, we contend that skeptical actions are just as, if not more, pertinent to effective audits.…”