Nudging Auditors’ Unconscious to Improve Performance on an Accounting Estimate Task

International Journal of Auditing

Posted: 12 Jan 2022

See all articles by Christine J. Nolder

Christine J. Nolder

Suffolk University

Nicole V.S. Ratzinger-Sakel

University of Hamburg

Jochen Theis

University of Southern Denmark

Date Written: October 13, 2021

Abstract

Auditing deficiencies related to accounting estimates continue to account for a significant percentage of auditing deficiencies identified during routine inspections. Regulators suggest that a lack of auditors’ professional skepticism may be to blame. We test a skeptical language priming intervention to induce auditors into a skeptical mindset. Additionally, we posit that skeptical language embedded in a firm’s decision aid will induce a skeptical attitude, which we measure in terms of auditors’ beliefs and feelings (i.e., confidence, concern) associated with the reasonableness of management’s estimate. We find that the skeptical language prime has a positive effect on the quality auditors’ cognitive processing and reasonableness judgments. We also find that the skeptical language keeps auditors’ feelings of concern high as opposed to conventional language, which resulted in auditors feeling less concerned. Moreover, we found that auditors’ negative feelings of concern were the primary driver of recommended testing both before and after introducing the firm’s decision aid.

Keywords: Professional Skepticism, Accounting Estimates, Deliberative Mindset

Suggested Citation

Nolder, Christine J. and Ratzinger-Sakel, Nicole V.S. and Theis, Jochen, Nudging Auditors’ Unconscious to Improve Performance on an Accounting Estimate Task (October 13, 2021). International Journal of Auditing, Available at SSRN: https://ssrn.com/abstract=4003479

Christine J. Nolder (Contact Author)

Suffolk University ( email )

Boston, MA 02108
United States

Nicole V.S. Ratzinger-Sakel

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Jochen Theis

University of Southern Denmark

Universitetsparken 1
DK-6000 Kolding, 6000
Denmark

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