Professional Skepticism and Auditors' Assessment of Misstatement Risks : the Moderating Effect of Experience and Time Budget Pressure

• Autorzy: Sayed Alwee Hussnie Sayed Hussin , Takiah Mohd Iskandar , Norman Mohd Saleh , Romlah Jaffar
• Języki publikacji: EN

Abstrakty

EN

Background: This study employs a field experiment to examine the relationship between professional skepticism, experience, and time budget pressure on auditors' assessment of risk of misstatement. In addition, the study examines the moderating effect of experience and time budget pressure on the relationship between professional skepticism and auditors' assessment of risk from material misstatements; 2) Method: This study employs a multiple regression analysis on 248 auditors from both Big4 and non-Big4 firms; 3) The results indicate that professional skepticism and experience have positive effects while time budget pressure has a negative effect on auditors' assessment of risk from material misstatements; and 4) The positive effect of professional skepticism on auditors' assessment of risk from material misstatement is stronger among more experienced auditors than that among less experienced. On the other hand, the positive effect of professional skepticism on risk assessment is weaker when auditors work under high time budget pressure than that when they work under low time budget pressure. Additional analysis on the samples from the two selected areas, Kuala Lumpur and Selangor, produces consistent results indicating that the use of separate models for different samples is not necessary. Hence, the study uses a single model for the final analysis. The results provide a better understanding on whether the auditors are able to sustain professional skepticism with a given amount of relevant audit experience and under different levels of time budget pressure. (original abstract)

Słowa kluczowe

EN

Audit; Authorized auditors; Employee skills; Risk assessment; Quality of work

PL

Audyt; Biegli rewidenci; Umiejętności pracownicze; Ocena ryzyka; Jakość pracy

• Czasopismo: Economics & Sociology
• Rocznik: 2017
• Tom: 10
• Numer: nr 4
• Strony: 225--250

Twórcy

autor

Sayed Alwee Hussnie Sayed Hussin

• National Audit Department of Malaysia; Putrajaya, Kuala Lumpur, Malaysia

autor

Takiah Mohd Iskandar

• Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia

autor

Norman Mohd Saleh

• Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia

autor

Romlah Jaffar

• Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia

Bibliografia

• Ajzen, I. (1991). The Theory of Planned Behavior. Organizational Behavior and Human Decision Processes, 50, 179-211.
• Alleyne, P. A., Devonish, D., Alleyne, P. (2006). Perceptions of Auditor Independence in Barbados. Managerial Auditing Journal, 21, 621-635.
• Armitage, C. J., Conner, M. (2001). Efficacy of the Theory of Planned Behaviour: A Meta-Analytic Review. British Journal of Social Psychology, 40, 471-499.
• Audit Oversight Board of Malaysia (2012). Annual Report. Security Commission, Kuala Lumpur.
• Bandura, A. (1986). Social Foundations of Thought and Action: A Social Cognitive Theory. Englewood Cliffs, NJ: Prentice-Hall, Inc.
• Bennett, R., Hartel, C. E. J. McColl-Kennedy, J. R. (2005). Experience as A Moderator of Involvement and Satisfaction on Brand Loyalty in A Business-To-Business Setting. Industrial Marketing Management, 34(1), 97-107.
• Braun, R. L. (2000). The Effect of Time Pressure on Auditor Attention to Qualitative Aspects of Misstatements Indicative of Potential Fraudulent Financial Reporting. Accounting, Organizations and Society, 25, 243-259.
• Buchan, H. F. (2005). Ethical Decision Making in The Public Accounting Profession: An Extension of Ajzen's Theory of Planned Behavior. Journal of Business Ethics, 61(2), 165-181.
• Carpenter, T.D., Reimers, J.L. (2005). Unethical and Fraudulent Financial Reporting: Applying the Theory of Planned Behavior. Journal of Business Ethics, 60(2), 115-129.
• Carpenter, T. D., Reimers, J. L. (2013). Professional Skepticism: The effects of A Partner's Influence and the Level of Fraud Indicators on Auditors' Fraud Judgments and Actions. Behavioral Research in Accounting, 25(2), Fall, 45-69.
• Cavana, R., Delahaye, B. L., Sekaran, U. (2001). Applied Business Research: Qualitative and Quantitative Methods. John Wiley and Sons, Milton, Queensland, Australia.
• Coram, P., Ng, J., Woodliff, D. (2003). A Survey of Time Budget Pressure and Reduced Audit Quality among Australian Auditors. Australian Accounting Review, 13(1), 38-44.
• DeZoort, F. T., Lord, A. T. (1997). A Review and Synthesis of Pressure Effects Research in Accounting. Journal of Accounting Literature, 16, 28-86.
• Eagly, A. H., Chaiken, S. (2005). Attitude Research in the 21st Century: The Current State of Knowledge. In: The Handbook of Attitudes, (eds.), D. Albarracín, B.T. Johnson and M. P. Zanna, 743-768. Mahwah, New Jersey: Lawrence Erlbaum Associates.
• Gundry, L. C., Liyanarachchi, G. A. (2007). Time Budget Pressure, Auditors' Personality Type, and the Incidence of Reduced Audit Quality Practices. Pacific Accounting Review, 19(2), 125-152.
• Halil, P., Zubaidah, I., Smith, M. (2010). Dysfunctional Audit Behavior: An Explanatory Study in Malaysia. Asian Review of Accounting, 18(2), 162-173.
• Hassink, H., Meuwissen, R., Bollen, L. (2010). Fraud Detection, Redress and Reporting by Auditors. Managerial Auditing Journal, 25(9), 861-881.
• Hurtt, R. K. (2010). Development of a Scale to Measure Professional Skepticism. Auditing: A Journal of Practice & Theory, 29(1), 149-171.
• Hurtt, R. K., Brown-Liburd, H., Earley, C. E., Krishnamoorthy, G. (2013). Research on Auditor Professional Skepticism: Literature Synthesis and Opportunities for Future Research. Auditing: A Journal of Practice and Theory, 32(1), 45-97.
• Hussin, S. A. H., Iskandar, M. I. (2013). Exploratory Factor Analysis on Hurtt's Professional Skepticism Scale: A Malaysian Perspective. Asian Journal of Accounting and Governance, 4, 11-19.
• International Standard on Auditing 200 (ISA 200) (2008). Overall Objective of the Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on Auditing.
• International Standard on Auditing 240 (ISA 240) (2004). The Auditor's Responsibility to Consider Fraud in an Audit of Financial Statements.
• Iskandar, T. M., Mohamed, Z. M., Jaffar, R., Hussin, S. A. H. (2016). Inhibiting and Driving Factors of Professional Skepticism from the Social Learning Perspective. International Journal of Economics and Management, 10(52), 427-444.
• Kelley, T., Margheim, L. (1990). The Impact of Time Budget Pressure, Personality, and Leadership Variables on Dysfunctional Auditor Behavior. Auditing: A Journal of Practice & Theory, 9, 21-42.
• Knapp, C. A., Knapp, M. C. (2001). The Effects of Experience and Explicit Fraud Risk Assessment in Detecting Fraud With Analytical Procedures. Accounting, Organizations and Society, 26, 25-37.
• KPMG (2013). KPMG Fraud Survey Report. Kuala Lumpur, Malaysia.
• Lee, C. W., Truong, H. N. (2014). An Empirical Investigation of The Association between Repetitive Message Effect and Social Marketing Communication Effectiveness in Taiwan. International Journal of Research in Social Sciences, 3(6), 50-64.
• Margheim, L., Kelley, T., Pattison, D. (2005). An Empirical Analysis of the Effects of Auditor Time Budget Pressure and Time Deadline Pressure. Journal of Applied Business Research, 21(1), 23-35.
• McDaniel, L. S. (1990). The Effects of Time Pressure and Audit Program Structure on Audit Performance. Journal of Accounting Research, 28, 267-285.
• Moyes, G. D., Hasan, I. (1996). An Empirical Analysis of Fraud Detection Likelihood. Managerial Auditing Journal, 11(3), 41-46.
• Naibei, I. K, Oima, D. O., Ojera, P. B., Owiye, O. P. (2014). Application of Business Risk Auditing among Audit Firms in Kenya. International Multidisciplinary Journal, 8(2), 325-342.
• Nair, P., Kamalanabhan, T. J. (2010). Performance Pressure and Peer Reporting of Infractions: A Moderated Mediation Model. Journal of Indian Business Research, 2(4), 216-229.
• Nelson, M. (2009). A model and literature review of professional skepticism in auditing. Auditing: A Journal of Practice and Theory, 28(1), 1-34.
• Otley, D. T., Pierce, B. J. (1996). Audit Time Budget Pressure: Consequences and Antecedents. Accounting, Auditing & Accountability Journal, 9(1), 31-58.
• Owusu-Ansah, S., Moyes, D. G., Oyelere, B. P., Hay, D. (2002). An Empirical Analysis of The Likelihood of Detecting Fraud in New Zealand. Managerial Auditing Journal, 17(4), 192-204.
• Payne, E. A., Ramsay, R. J. (2005). Fraud Risk Assessments and Auditors' Professional Skepticism. Managerial Auditing Journal, 20(3), 321-330.
• Pothiniker, K. (2004). Fraud. In: M. Lee (Ed.). Internal Audit Practices in Malaysia (pp. 308).
• Kuala Lumpur: Prentice Hall Pearson Malaysia Sdn. Bhd. Quadackers, L., Groot, T., Wright, A. (2014). Auditors' Professional Skepticism: Neutrality versus Presumptive Doubt. Contemporary Accounting Research, 31(3), 639-657.
• Rose, J. M. (2007). Attention to Evidence of Aggressive Financial Reporting and Intentional Misstatement Judgments: Effects of Experience and Trust. Behavioral Research in Accounting, 19, 215-229.
• Saksena, P. N. (2010). Four Tools (Under the Umbrella of Continuous Improvement) to Help Auditors Prevent/Detect Frauds. The Journal of American Academy of Business, 15(2), 28-36.
• Tabachnick, B. G., Fidell, L. S. (2007). Using Multivariate Statistics. Boston: Pearson/Allyn & Bacon.
• Zakaria, M., Haron, H., Ismail, I. (2010). Knowledge of Ethics, Perceived Ethical Problems and Ethical Judgments. Journal of Financial Reporting and Accounting, 8(1), 50-64.

Identyfikatory

DOI

10.14254/2071-789X.2017/10-4/17