How do Audit Committees Support Audit Engagement Teams and Encourage Professional Skepticism? A Survey and Experimental Evidence

61 Pages Posted: 10 Jan 2022 Last revised: 26 Feb 2022

See all articles by Joseph F. Brazel

Joseph F. Brazel

North Carolina State University - Poole College of Management - Department of Accounting

Anna Gold

Vrije Universiteit Amsterdam; Norwegian School of Economics (NHH)

Justin Leiby

University of Illinois at Urbana-Champaign

Tammie Rech Schaefer

University of Missouri at Kansas City

Date Written: February 25, 2022

Abstract

We explore how audit committees (ACs) support audit engagement teams and whether AC support can improve auditors’ professional skepticism. We first survey audit practitioners and find that AC support is multidimensional, varies between engagements, and often is not communicated to the entire engagement team. We then experimentally investigate whether the explicit communication of AC support to the entire engagement team (by the partner vs. the AC chair) impacts the skepticism of auditors. While skeptical judgments are consistently high, auditors vary in their skeptical actions. When management attitudes towards the engagement team are poor, AC support communicated by the audit partner increases skeptical actions. Direct communication of support by the AC chair does not increase skepticism relative to when the partner conveys AC support. Our findings highlight the importance of AC support for audit teams, and the lack of AC support (or communication thereof) that exists on many audit engagements.

Keywords: audit committee, social support, fraud red flag, management attitude, auditor professional skepticism

JEL Classification: G34, M40, M41, M42

Suggested Citation

Brazel, Joseph F. and Gold, Anna and Leiby, Justin and Schaefer, Tammie Rech, How do Audit Committees Support Audit Engagement Teams and Encourage Professional Skepticism? A Survey and Experimental Evidence (February 25, 2022). Available at SSRN: https://ssrn.com/abstract=4003607 or http://dx.doi.org/10.2139/ssrn.4003607

Joseph F. Brazel

North Carolina State University - Poole College of Management - Department of Accounting ( email )

Campus Box 8113
Nelson Hall
Raleigh, NC 27695
United States
919-513-1772 (Phone)

Anna Gold

Vrije Universiteit Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31 20 598 25 92 (Phone)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

Justin Leiby (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 S 6th St
Champaign, IL 61822
United States
2173007825 (Phone)

Tammie Rech Schaefer

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

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