Auditor Mindsets in Fraud-Detection Planning

40 Pages Posted: 29 Mar 2021

See all articles by Brett A. Rixom

Brett A. Rixom

University of Nevada, Reno - College of Business

David Plumlee

University of Utah - David Eccles School of Business

Date Written: March 26, 2021


The PCAOB maintains that auditors planning fraud detection tend to choose procedures that readily demonstrate audit work rather than those more effective at detecting fraud. One possible reason for this disparity between auditors’ obligation and their performance may be the way they conceive the fraud-detection planning task. Currently, auditors view the task as selecting procedures aware that their choices will subsequently be reviewed, which leads them to call to mind “implementation intentions” from previous fraud-detection planning. We consider an alternative view of the task where subordinate auditors work under agreements that offer potential compensation for forming effective fraud-detection plans, leading them to construe the task as an unresolved problem. This alternative representation of the task can lead auditors to adopt a deliberative mindset where they engage in an open-minded examination of evidence and set engagement-specific detection goals. In an experiment, auditors were assigned to complete a fraud-detection planning task under performance-contingent agreements, the typical review process, or complete anonymity. We find that auditors operating under performance-contingent agreements reported that the task required deeper thought about fraud risks and development of an overall strategy. Under performance-contingent agreements, auditors spent more time planning, were more likely to correctly identify the probable source of fraud and selected programs that were more effective. Auditors focused on accountability described the task as providing the reviewer with detailed explanations and demonstrating that a lot of steps were taken. They budgeted significantly more hours to less effective procedures and fewer hours to effective, new procedures.

Keywords: deliberative mindset, implemental mindset, fraud detection, performance-contingent agreements

JEL Classification: M42, M49

Suggested Citation

Rixom, Brett A. and Plumlee, David, Auditor Mindsets in Fraud-Detection Planning (March 26, 2021). Available at SSRN: or

Brett A. Rixom (Contact Author)

University of Nevada, Reno - College of Business ( email )

United States

David Plumlee

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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