The Effect of Forensic Expertise and Time Pressure on Fraud Risk Assessment and Responsiveness

31 Pages Posted: 10 Nov 2016

See all articles by Inez Verwey

Inez Verwey

Nyenrode Business University

Stephen Kwaku Asare

University of Florida - Fisher School of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: November 4, 2016

Abstract

Professional standards direct auditors to consult with forensic specialists to enhance the quality of fraud decisions. However, research underlying this prescription is limited. We address this gap by examining the effect of forensic expertise and time pressure on fraud cue identification and responsiveness in an experiment manipulating forensic expertise (forensic specialist versus auditor) and time pressure (present versus absent). The results show that forensic specialists identify more fraud cues than auditors, although this did not result in differential fraud risk assessment. Further, auditors not only plan less effective audit procedures than forensic specialists but also the performance difference is more substantial in the more realistic time pressure condition. However, as with prior studies, we did not find an association between fraud risk assessment and the planning of audit procedures for both groups. Taken together, the results provide evidence that consulting forensic specialists can enhance fraud decision quality and the performance difference is attributable to fraud cue identification and program planning but not through differential assessment of fraud risk assessment or its linkage to program planning.

Keywords: Audit Planning, Fraud Risks, Time Budget Pressure, Forensic Specialists

JEL Classification: M42

Suggested Citation

Verwey, Inez and Asare, Stephen Kwaku, The Effect of Forensic Expertise and Time Pressure on Fraud Risk Assessment and Responsiveness (November 4, 2016). Available at SSRN: https://ssrn.com/abstract=2864350 or http://dx.doi.org/10.2139/ssrn.2864350

Inez Verwey (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

Stephen Kwaku Asare

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States

HOME PAGE: http://warrington.ufl.edu/fsoa/

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