Does Seeking Audit Evidence Impede the Willingness to Impose Audit Adjustments?

49 Pages Posted: 26 Oct 2019 Last revised: 29 Mar 2021

See all articles by Steven J. Kachelmeier

Steven J. Kachelmeier

University of Texas at Austin

Dan Rimkus

University of Florida

Date Written: March 26, 2021

Abstract

In two incentivized auditing experiments, participants specify lower adjustments when they choose to generate evidence than when the same evidence is provided without investigative action. This finding is consistent with theory from mental accounting and information choice, which in combination predict that choosing to undertake effortful investigation can magnify aversion to costly adjustments. Supporting this theory, we do not observe an effort choice effect if we separate investigative and adjustment decisions in noninteractive pairs in our first experiment. In our second experiment, we allow all participants to interact in pairs, observing a negative effect of effort choice only when participants responsible for evidence perceive high involvement in the adjustment decisions made by their paired counterparts. Our study provides insight into why auditors exert diligent effort only to waive the adjustments implied by that effort. A potential implication is that technological advances that facilitate evidence collection could enhance auditor independence.

Keywords: audit effort, audit adjustments, auditor independence, mental accounting, information choice, audit technology

Suggested Citation

Kachelmeier, Steven J. and Rimkus, Dan, Does Seeking Audit Evidence Impede the Willingness to Impose Audit Adjustments? (March 26, 2021). Available at SSRN: https://ssrn.com/abstract=3469748 or http://dx.doi.org/10.2139/ssrn.3469748

Steven J. Kachelmeier

University of Texas at Austin ( email )

Department of Accounting
2110 Speedway, Mail Stop B6400
Austin, TX 78712
United States
512-471-3517 (Phone)
512-471-3904 (Fax)

Dan Rimkus (Contact Author)

University of Florida ( email )

PO Box 117165, 201 Stuzin Hall
Gainesville, FL 32610-0496
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
115
Abstract Views
795
rank
292,805
PlumX Metrics