The Influence of Documentation Specificity and Priming on Auditors' Fraud Risk Assessments and Evidence Evaluation Decisions

42 Pages Posted: 11 Feb 2008 Last revised: 8 Sep 2009

See all articles by Jacqueline S. Hammersley

Jacqueline S. Hammersley

University of Georgia - J.M. Tull School of Accounting

E. Michael Bamber

University of Georgia

Tina Carpenter

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Date Written: August 31, 2009

Abstract

The Public Company Accounting Oversight Board (PCAOB) recently suggested that auditors’ lack of specific fraud planning documentation has led auditors to devote insufficient attention to fraud risks in subsequent audit work. Guided by Support Theory, we experimentally investigate how the specificity of fraud risk documentation during audit planning influences auditors’ subsequent audit work. We also examine the effect of priming auditors about the fraud risks identified during planning before they begin subsequent evidence evaluation. We find that auditors’ planning stage efforts do affect subsequent fraud risk assessments and evidence evaluation decisions. Unprimed auditors who receive more specific documentation increase their fraud risk assessments and evidence requests. Priming’s effects are more complex. Priming auditors who receive summary documentation also increases fraud risk assessments and evidence requests; however, priming auditors who receive specific documentation reduces these judgments because the priming makes the client-specific risks seem less typical. Accordingly, the PCAOB’s call for more documentation can have the unintended consequence of reducing auditors’ sensitivity to fraud.

Keywords: Audit documentation, Fraud risk assessments, Evidence evaluation, Support Theory, Priming

JEL Classification: M49, G38

Suggested Citation

Hammersley, Jacqueline S. and Bamber, E. Michael and Carpenter, Tina, The Influence of Documentation Specificity and Priming on Auditors' Fraud Risk Assessments and Evidence Evaluation Decisions (August 31, 2009). Available at SSRN: https://ssrn.com/abstract=1090608 or http://dx.doi.org/10.2139/ssrn.1090608

Jacqueline S. Hammersley (Contact Author)

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

E. Michael Bamber

University of Georgia ( email )

Athens, GA 30602
United States
706-542-3601 (Phone)
706-542-3630 (Fax)

Tina Carpenter

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

230 Brooks Hall
Athens, GA 30602-6254
United States
706-542-3619 (Phone)

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