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Risky Assurance Engagements: Archival Findings in Australian and New Zealand Courts
Karen A Van Peursem,
University of Waikato
Neil P Harnisch, University of Waikato
ABSTRACT. The purpose of this paper is to explore professional negligence patterns in Australian and New Zealand court cases to determine indicators of inherent risk. Court cases in which the professional auditor or accountant is a defendant and/or accused of engagement negligence are the subject of study. From a population of over 600 cases, 120 accusations of auditor negligence found within 56 different case-groups are found. Correlations between negligence ‘type’ and a number of predictive variables identify patterns of interest. Further analysis compares our findings to Australian and New Zealand exchange listing data. Significant correlations are evaluated in further detail. Results point to patterns in management fraud, industry segments, engagement types and multiple engagements. Conclusions consider implications for audit inherent risk assessment and pose fruitful areas for further research.
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