Have You Seen...?
Pennie Bagley, Texas Tech University
Albert Nagy, John Carroll University
Gary Peters, University of Arkansas
“When Auditors Err: How Mistake Significance and Superiors' Historical Reactions Influence Auditors' Likelihood to Admit a Mistake,” by C. Stefaniak and J. C. Robertson, International Journal of Auditing (Forthcoming).
This study examines the impact of reviewer reactions to staff auditor’s work. The authors note the importance of procedures performed by staff auditors and the potentially critical impact the procedures can have on audit opinions. Despite this importance, audit staff may be reluctant to admit mistakes to protect their professional image and avoid negative reactions from superiors. The authors examine these conflicts by investigating the impact of the significance of the mistakes and superiors’ historical reactions to mistakes. In sum, they find an interaction suggesting that staff auditors are more likely to admit errors when their superiors have reacted positively, regardless of error significance. However, when audit staff have experienced prior negative reactions, they are less likely to admit apparently insignificant errors.
“The Effect of Goals on Auditors' Judgments and Their Perceptions of and Conformity to Other Auditors' Judgments,” by S. K. Asare and A. M. Cianci, Managerial Auditing Journal (Volume 24, Issue 8): 724-742.
The authors investigate the impact of explicit and competing goals on the calibration and conformity of auditors' judgments. The authors consider the competing goals of accuracy and client agreement. The authors measure conformity as the degree of consistency between the auditor’s judgment and the judgments they perceive other auditors will make. Calibration represents the extent to which these perceived judgments agree with actual judgments of the other auditors. Using an experiment involving inventory write-offs, the authors find that auditors with accuracy goals are more likely to recommend write-offs than in other goal conditions; and auditors with both goals are more likely to recommend a write-off. However, while auditors' judgments are well calibrated, mixed evidence of conformity is found.
“Information and Communications Technology and Auditing: Current Implications and Future Directions,” by K. Omoteso, A. Patel, and P. Scott, International Journal of Auditing. (Forthcoming).
The authors collect evidence from interviews and questionnaires to document how information and communications technology (ICT) tools and techniques are impacting audit tasks, auditors (internal and external) and organizations. The authors consider several attributes of the audit function including coordination, control, authority and structure. Their findings have implications for the increasing prominence of continuous auditing, artificial intelligence and CobiT. They also observe the current need for new software development to help auditors match the complexity of their clients' information systems.
“Can Audit Reforms Affect the Information Role of Audits? Evidence from the German Market,” by J. Gassen and H. Skaife, Contemporary Accounting Research (Volume 26, Number 3): 867-898.
This study investigates whether audit reforms enhance the information role of audits in a setting where audits traditionally serve a statutory reporting function. The authors’ setting includes the audit reforms mandated by the German government in the Act on Control and Transparency of Enterprises. Specifically the authors test the association between the reforms and differences in the types of audit reports issued, the information content of first-time going-concern audit opinions, and the demand for dominant audit suppliers. In sum, their results suggest that the audit reforms improved the information role of German audits and that German firms responded to the improvement in audit reporting by increasing their demand for dominant audit suppliers.
“Are Fully Independent Audit Committees Really Necessary?” by S. N. Bronson, J. V. Carcello, C. W. Hollingsworth, and T. L. Neal, Journal of Accounting and Public Policy (Volume 28, Issue 4): 265-280.
The authors highlight the debate and gap in prior literature concerning the importance of a 100% independent audit committee. The paper addresses whether the regulatory requirements of a completely independent audit committee are necessary to obtain the monitoring benefits related to audit committee independence that have been documented in prior literature. Overall the authors find that the beneficial impact of audit committee independence is achieved only when all members of the audit committee exhibit independence.
“Using Nonfinancial Measures to Assess Fraud Risk,” by J. F. Brazel, K. L. Jones and M. F. Zimbelman, Journal of Accounting Research (Volume 47, Issue 5): 1135-1166.
This study considers whether prior correlations between nonfinancial measures and financial measures can signal increases in fraud risk. Namely, the authors find that differences from these patterns are significantly greater for firms that committed fraud than for their nonfraud competitors. Their results provide evidence consistent with the ability of auditors to effectively use nonfinancial measures (NFMs) to assess the reasonableness of financial performance and the risk of fraud. |
