When Do Auditors Use Specialists' Work to Improve Problem Representations of and Judgments about Complex Estimates?

Griffith, Emily E.

doi:10.2308/accr-51926

Cited by 60 publications

(36 citation statements)

References 54 publications

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“…Other studies are taking into consideration the areas where such risks can arise and document potential concerns. For instance, Griffith (2018) considers that pattern recognition is important when dealing with highquality audit judgments. Moreover, he suggested that auditors' epistemic motivation to incorporate the cue into their problem representation occurs only in the presence of a situational factor as risk.…”

Section: Discussionmentioning

confidence: 99%

Auditing Research: A Review of Recent Research Advances

Cuzdriorean¹

2018

EJEF

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We survey recent auditing research published in top 5 leading accounting journals over the last two years (2017-2018). We use the recent findings as a roadmap aiming to offer useful suggestions for future research. Finally, we urge more research on topics related to: implications of social challenges facing audits of complex estimates, implications of contrast effect for audit quality, assessing the effects of conservative bias in audit work, examining the factors affecting accounting firms` competencies.

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Section: Discussionmentioning

confidence: 99%

Auditing Research: A Review of Recent Research Advances

Cuzdriorean¹

2018

EJEF

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“…Hamilton proposes that auditors use the client's perspective, that is, take into account the circumstances that the client was facing when preparing the financial statements, especially if there are indications of intentional misstatements [97].…”

Section: Auditorsmentioning

confidence: 99%

Research Topics in Accounting Fraud in the 21st Century: A State of the Art

2019

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Companies play a role in society that clearly goes beyond mere economic interest. Their contribution to social development and to the sustainability of the territory where they are located seems unquestionable. However, after the great financial scandals of companies such as ENRON, WorldCom or AHOLD, interest groups require accurate and transparent financial information. The development of more demanding financial reporting standards seems, however, not to have been up to scratch, since accounting fraud continues to be detected all over the world. The search, therefore, for possible causes that may induce companies to act unethically was the main motivation behind this research. To do this, a review of the literature in high-impact journals that has dealt with accounting fraud, covering the main lines of research, was carried out. The findings of the literature review highlight the importance of responsible corporate governance and good accounting practices, as well as the importance of certain psychological characteristics of managers and employees as enhancers of the lack of ethics. It is clear that the social cost of accounting fraud should be minimized, and governments should develop specific policies that combine responsible corporate governance in companies with the sustainability of their environment.

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“…Prior research has shown auditors' judgments and decision-making processes are sensitive to audit risk. For example, high audit risk increases evidence recall (Sprinkle and Tubbs 1998), increases time spent reviewing working papers (Bamber et al 1988;Bamber and Bylinksi 1987), and affects client-acceptance decisions (Johnstone 2000) as well as the effective use of information from specialists (Griffith 2018). accuracy goals), they will select the most effective audit procedures, without limiting this choice to just the set of traditional procedures.…”

Section: Goal Activation Theorymentioning

confidence: 99%

“…In examining the effect of an AJR on auditors' pursuit of more innovative procedures, we also consider the moderating effect of audit risk as auditors' judgments and processes have been documented to be sensitive to audit risk (e.g., Griffith 2018;Johnstone 2000;Sprinkle and Tubbs 1998). When audit risk is relatively high, there is a greater need for audit procedures that will be effective in providing reasonable assurance that the financial statements are free from material misstatements (i.e., lower detection risk).…”

Section: Introductionmentioning

confidence: 99%

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

Kang

Piercey

Trotman

2019

Contemporary Accting Res

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The current audit environment encourages auditors to conduct defensive auditing procedures in lieu of using new, innovative, and potentially more effective audit procedures, due to concerns these procedures may be second‐guessed in litigation or by audit inspectors such as the PCAOB. As a result, auditors may prefer traditional “generally accepted” procedures over innovative procedures that are potentially more effective. We test recent proposals that an Audit Judgment Rule (AJR) encourages the use of innovative, and potentially more effective, audit procedures analogous to the similar Business Judgment Rule that affords legal protections to corporate directors. Under an AJR, litigators or audit inspectors could not second‐guess auditor judgments, even if they perceive that alternate judgments would have ordinarily been reached, provided the auditor's judgment was made in good faith and in a rigorous manner. However, the AJR's requirements that auditors must defend the rigor of their innovative judgments could potentially backfire and lead auditors to select more traditional procedures. Under the framework of goal activation theory, we conduct an experiment with audit managers and seniors and find that an AJR makes auditors less likely to select innovative audit procedures, particularly when audit risk is high. They do so despite believing the innovative procedures to be more effective than the traditional procedures. Findings from a supplementary experiment with experienced auditors further suggest that national office affirmation of the reasonableness of the procedures does not help overcome this effect. Overall, our findings suggest that an AJR may have the unintended consequence of further increasing auditors' focus on more traditional, and potentially less effective, audit procedures.

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When Do Auditors Use Specialists' Work to Improve Problem Representations of and Judgments about Complex Estimates?

Cited by 60 publications

References 54 publications

Auditing Research: A Review of Recent Research Advances

Auditing Research: A Review of Recent Research Advances

Research Topics in Accounting Fraud in the 21st Century: A State of the Art

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

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