The occurrence and awareness of a misstatement effect in auditors' internal control severity judgments

Asare, Stephen Kwaku; Majoor, Barbara; Wright, Alex

doi:10.1111/ijau.12093

Cited by 4 publications

(1 citation statement)

References 35 publications

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“…Fay et al (2015) investigated the effects of auditors' awareness of prior-years' testing strategies that have been applied to auditor's judgements, and their findings showed that auditors who possessed such awareness would use the prior-years' strategies as anchors, allowing them to highlight risk factors in specific areas of their clients' accounts and develop audit procedures accordingly. Furthermore, Asare et al (2017) investigated auditors' internal control severity judgements in cases where the auditors were aware or unaware of a misstatement outcome (i.e. as an outcome of the application of the evaluated internal control).…”

Section: Awareness Of the Profession's Reputation For Independencementioning

confidence: 99%

The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement

Nasution

Östermark

2019

SRJ

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Purpose The purpose of this paper is to develop and test the scale of auditors’ awareness of the profession’s reputation for independence, defined as the degree to which auditors recognise the importance of the reputation for independence and acknowledge the impact of their judgements and decisions on that reputation, and to provide preliminary evidence of an association between auditors’ awareness of the profession’s reputation and auditors’ ethical judgement. Design/methodology/approach A seven-item scale was developed to measure auditors’ awareness of the profession’s reputation for independence, and an auditing case was used to measure auditors’ ethical judgement. A survey questionnaire of practising auditors working in auditing firms in Indonesia provides data for testing the validity and reliability of the new scale and proposed hypothesis. Findings The findings show that the scale is unidimensional and has satisfied reliability and validity. Moreover, the preliminary evidence of a positive association between the new scale and auditors’ ethical judgement is provided. Research limitations/implications Further studies should test the validity and reliability of the scale of awareness of the profession’s reputation for independence with larger data and in different settings. Investigation of the antecedent factors of auditors’ awareness of the profession’s reputation for independence is suggested. Originality/value This paper develops a new measure, namely, the awareness of the profession’s reputation for independence. Preliminary evidence to establish an association between that awareness and auditor ethical judgement is provided.

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Section: Awareness Of the Profession's Reputation For Independencementioning

confidence: 99%

The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement

Nasution

Östermark

2019

SRJ

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Psychological Distance and Auditor Assessment of the Severity of an Internal Control Deficiency

Jackson,

Keyser,

Prawitt

2023

SSRN Journal

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The Effect of a Prompt to Adopt the Prudent Official's Perspective on Auditors' Judgments of the Severity of Control Deficiencies

Asare

Wright

2019

Auditing: A Journal of Practice &Amp; Theory

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SUMMARY Regulators have expressed concerns about auditors' tendency to over-rely on imprecise compensating controls when evaluating the severity of control deficiencies. We provide evidence on whether prompting auditors to use a prudent official's evaluative perspective will mitigate this tendency. We hypothesize that auditors who are prompted to adopt the prudent official's perspective evaluate compensating controls and the severity of control deficiencies more effectively than those who are not prompted. We examine our hypotheses by manipulating a prompt to adopt the prudent official's perspective (present versus absent) and the precision of compensating controls (precise versus imprecise) in a 2 × 2 between subjects experiment where experienced auditors evaluate a revenue control deficiency that resulted in an immaterial misstatement. The experimental results are consistent with our hypotheses and support the conclusion that regulators and firms can alter auditors' evaluative perspective to achieve more effective assessment of risk-related conditions.

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The occurrence and awareness of a misstatement effect in auditors' internal control severity judgments

Cited by 4 publications

References 35 publications

The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement

The impact of auditors’ awareness of the profession’s reputation for independence on auditors’ ethical judgement

Psychological Distance and Auditor Assessment of the Severity of an Internal Control Deficiency

The Effect of a Prompt to Adopt the Prudent Official's Perspective on Auditors' Judgments of the Severity of Control Deficiencies

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