Empowering Auditors to Pursue Fraud During Evidence Evaluation

51 Pages Posted: 5 Oct 2018 Last revised: 23 May 2022

See all articles by Ashley A. Austin

Ashley A. Austin

University of Richmond

Tina Carpenter

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

Margaret H. Christ

University of Georgia - Terry College of Business

Christy Nielson

University of Mississippi; affiliation not provided to SSRN

Date Written: August 1, 2018

Abstract

Auditors struggle to respond skeptically to fraud, reducing audit quality. This problem is particularly prevalent during the evidence evaluation phase of the audit, when auditors face the greatest time constraints. Empowerment theory suggests that employees with autonomy to navigate the course of their own work overcome constraints and produce higher quality work. We predict and find that empowered auditors better respond to unanticipated evidence suggestive of fraud encountered during evidence evaluation, and these auditors do not work inefficiently in the absence of such evidence. Further, we find support for our theorized judgment process in which auditors who feel more empowered assess fraud risk higher, leading them to indicate a greater need for more work and, ultimately, to recommend more effective audit procedures. We examine two theory-driven interventions and find that supervisor support effectively engenders feelings of empowerment but a charge code designed to allow autonomy for executing unplanned audit procedures does not. This study contributes to accounting research and practice by identifying a mechanism to improve auditors’ skeptical behavior and to the empowerment literature by disentangling the construct’s antecedents.

Keywords: audit quality; budget pressure; empowerment; fraud; professional skepticism; time constraints.

Suggested Citation

Austin, Ashley A. and Carpenter, Tina and Christ, Margaret H. and Nielson, Christy, Empowering Auditors to Pursue Fraud During Evidence Evaluation (August 1, 2018). Available at SSRN: https://ssrn.com/abstract=3247783 or http://dx.doi.org/10.2139/ssrn.3247783

Ashley A. Austin

University of Richmond ( email )

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

Tina Carpenter (Contact Author)

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)

Margaret H. Christ

University of Georgia - Terry College of Business ( email )

Athens, GA 30602-6254
United States
706-542-3602 (Phone)

Christy Nielson

University of Mississippi ( email )

Oxford, MS 38677
United States

affiliation not provided to SSRN

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