Empowering Auditors to Pursue Fraud During Evidence Evaluation

41 Pages Posted: 5 Oct 2018

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; University of Georgia

Date Written: August 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 people overcome constraints and produce higher quality work when they feel empowered (i.e., capable of navigating the course of their work). Based on this theory, we develop an intervention that combines a professional skepticism charge code with supervisor support. Using an experiment, we predict and find that when fraud is present during evidence evaluation, auditors with our intervention recognize a greater number of fraud evidence items and identify more procedures that effectively target fraud. However, when fraud is absent, these auditors are, appropriately, no more likely to perform more work than other auditors. This study contributes to theory and practice as our theory-driven intervention improves auditors’ performance in an area where they have been deficient in practice.

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

Suggested Citation

Austin, Ashley A. and Carpenter, Tina and Christ, Margaret H. and Nielson, Christy, Empowering Auditors to Pursue Fraud During Evidence Evaluation (August 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

University of Georgia ( email )

Athens, GA 30602-6254
United States

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