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
Date Written: August 31, 2009
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Do Strategic Reasoning and Brainstorming Help Auditors Change Their Standard Audit Procedures in Response to Fraud Risk?
Auditors' Use of Brainstorming in the Consideration of Fraud: Evidence from the Field
By Joseph F. Brazel, Tina Carpenter, ...
A Review and Model of Auditor Judgments in Fraud-Related Planning Tasks
How Do Audit Seniors Respond to Heightened Fraud Risk?
By Jacqueline S. Hammersley, Karla M. Zehms, ...
Encouraging Professional Skepticism in the Industry Specialization Era
Professional Skepticism: The Effects of a Partner’s Influence and the Presence of Fraud on Auditors’ Fraud Judgments and Actions
By Tina Carpenter and Jane L. Reimers
Auditors' Reactions to Inconsistencies between Financial and Nonfinancial Measures
By Joseph F. Brazel, Keith L. Jones, ...
An International Comparison of Social Interaction Attributes of Internal Auditors: An Analysis Using the FIRO-B
Corruption Awareness, Ethical Sensitivity, Professional Skepticism and Risk of Corruption Assessment: Exploring the Multiple Relationship in Indonesian Case
Descriptive Evidence from Audit Practice on SAS No. 99 Brainstorming Activities
By Jodi L. Gissel and Karla M. Zehms