Remembering Fraud in the Future: Investigating and Improving Auditors’ Attention to Fraud during Audit Testing

48 Pages Posted: 20 Sep 2017 Last revised: 28 Oct 2022

Multiple version iconThere are 2 versions of this paper

Date Written: October 21, 2022

Abstract

During the testing stages of the audit, auditors must simultaneously divide their attention between: (1) performing the planned audit procedures and (2) remaining broadly skeptical and alert for fraud. Regulators note instances in which auditors do not take actions that effectively respond to fraud risks during these later stages, suggesting auditors may devote insufficient attention to fraud while they are busy executing the planned audit procedures. Leveraging prospective memory theory, I identify and test an intervention that can improve auditors’ attention to fraud. Indeed, I find that encouraging auditors to have implementation intentions about fraud (i.e., more detailed plans about when and how they will consider fraud) interacts with auditors’ perceived fraud task importance to increase auditors’ attention to fraud when this attention would otherwise be lower, making auditors more likely to take effective fraud actions. Importantly, these results also indicate that, even in a high fraud risk setting, auditors may devote insufficient attention to fraud while performing the planned audit procedures, confirming regulators’ concerns.

Keywords: fraud risk; skeptical actions; prospective memory; implementation intentions

Suggested Citation

Austin, Ashley A., Remembering Fraud in the Future: Investigating and Improving Auditors’ Attention to Fraud during Audit Testing (October 21, 2022). Available at SSRN: https://ssrn.com/abstract=3038900 or http://dx.doi.org/10.2139/ssrn.3038900

Ashley A. Austin (Contact Author)

University of Richmond ( email )

28 Westhampton Way
Richmond, VA 23173
United States
804-426-5422 (Phone)

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