Auditor Business Process Analysis and Linkages Among Auditor Risk Judgements

30 Pages Posted: 27 Mar 2010 Last revised: 30 Jul 2015

See all articles by Natalia Kochetova

Natalia Kochetova

Saint Mary’s University - Sobey School of Business

Thomas M. Kozloski

Saint Mary's University - Sobey School of Business

William F. Messier, Jr.

NHH Norwegian School of Economics

Date Written: January 9, 2013

Abstract

This research note examines whether auditors “link” their entity-level risk assessments to their core business process risk assessments. For auditors who performed a business process analysis of the core business process, there is a positive association between the identification of significant process-level business risks and the identification of significant business risks at the entity level. We also find that performing a business process analysis leads to higher assessments of the risk of material misstatement at the process level. With respect to the linkages between risk-related judgments, we find that auditors link their assessments of misstatement risk at the process level to similar assessments at the entity level, while taking into account significant process-level risks.

Keywords: Business Process Analysis, Risk Assessment, Risk of Material Misstatement, Business Risk Identification, Risk-based Audits

JEL Classification: M40, M41, M49

Suggested Citation

Kochetova, Natalia and Kozloski, Thomas M. and Messier Jr, William F., Auditor Business Process Analysis and Linkages Among Auditor Risk Judgements (January 9, 2013). Auditing: A Journal of Practice & Theory, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1578923 or http://dx.doi.org/10.2139/ssrn.1578923

Natalia Kochetova (Contact Author)

Saint Mary’s University - Sobey School of Business ( email )

SB 318, Dept. of Accounting
Sobey School of Business, Saint Mary's University
Halifax, Nova Scotia B3H 3C3
Canada
902-420-5800 (Phone)
902-420-5011 (Fax)

Thomas M. Kozloski

Saint Mary's University - Sobey School of Business ( email )

923 Robie Street
Halifax, Nova Scotia B3H 3C3
Canada

William F. Messier Jr

NHH Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway
678-386-8634 (Phone)

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