The Effects of Fraud and Going-Concern Risk on Auditors' Assessments of the Risk of Material Misstatement and Resulting Audit Procedures

15 Pages Posted: 30 Nov 2007

See all articles by Allen D. Blay

Allen D. Blay

Florida State University

L. Dwight Sneathen

Georgia Southern University

Tim Kizirian

California State University, Chico - Department of Accounting and MIS

Multiple version iconThere are 2 versions of this paper

Abstract

This study uses audit file data to analyze the association between the auditors' preliminary assessments of going-concern and fraud risk and the planning and performance of the financial statement audit. We analyze the association between the above risks and the auditor's assessment of the risk of material misstatement (RMM) within the revenue cycle, and examine whether going-concern and fraud risk assessments have an effect on the persuasiveness, timing and extent of audit evidence gathered. Our results indicate that both fraud risk and going-concern risk are significantly related to RMM. Our results also indicate that although the effect of fraud risk is fully mediated by the RMM, moderate going-concern risk remains significantly related to our proxies for the persuasiveness and timing of audit evidence, even after controlling for RMM.

Suggested Citation

Blay, Allen Dennis and Sneathen, L. Dwight and Kizirian, Tim, The Effects of Fraud and Going-Concern Risk on Auditors' Assessments of the Risk of Material Misstatement and Resulting Audit Procedures. International Journal of Auditing, Vol. 11, No. 3, pp. 149-163, November 2007, Available at SSRN: https://ssrn.com/abstract=1033575 or http://dx.doi.org/10.1111/j.1099-1123.2007.00362.x

Allen Dennis Blay (Contact Author)

Florida State University ( email )

Rovetta Business Bldg. (RBA)
College of Business
Tallahassee, FL 32306-1110
United States
850-727-0953 (Phone)

L. Dwight Sneathen

Georgia Southern University ( email )

P.O. Box 8151
Statesboro, GA 30460-8151
United States

Tim Kizirian

California State University, Chico - Department of Accounting and MIS ( email )

Chico, CA 95929
United States
530 898-6463 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
1,498
PlumX Metrics