A live simulation-based investigation: Interactions with clients and their effect on audit judgment and professional skepticism

Gregory M. Trompeter, Jared Eutsler, Anne E Norris

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Threats to professional skepticism are embedded in the social relationships and interactions between auditors and management. These can affect auditor skepticism and the extent of audit procedures performed. In this study, we conduct an experiment using live simulation to create a realistic audit setting to investigate the effect of these interactions on professional skepticism. Each participant (n ¼ 49) completed a measure of trait skepticism and conducted an audit interview with a professional actor trained to play the role of a client controller. Findings indicate that, in general, participants who interview a friendly controller (rather than an intimidating controller) are less likely to determine questionable cash disbursements to be control exceptions and less likely to recommend more intensive follow-up. However, consistent with social psychology research on construct accessibility, planned contrasts indicate that participants who score low on trait skepticism are least likely to identify control exceptions and recommend more intensive follow-up when interviewing a friendly controller. This study advances research on professional skepticism by examining the impact that type of social interaction (friendly, intimidating) has on professional skepticism using a methodology (live simulation) that allows us to simulate a realistic audit environment. Use of this methodology increases external validity and generalizability of our findings. As a result, this study corroborates concerns that the social relationships/interactions between management and the auditor can be a threat to professional skepticism, and allows us to understand better how, when, and where these threats occur.

Original languageEnglish (US)
Pages (from-to)145-162
Number of pages18
JournalAuditing
Volume37
Issue number3
DOIs
StatePublished - Aug 1 2018

Fingerprint

Professional skepticism
Simulation
Interaction
Audit judgment
Audit
Controller
Auditors
Skepticism
Threat
Methodology
Social interaction
Social relationships
Interviewing
External validity
Social Psychology
Experiment
Cash
Accessibility
Generalizability

Keywords

  • Audit
  • Interview
  • Live simulation
  • Professional skepticism

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

A live simulation-based investigation : Interactions with clients and their effect on audit judgment and professional skepticism. / Trompeter, Gregory M.; Eutsler, Jared; Norris, Anne E.

In: Auditing, Vol. 37, No. 3, 01.08.2018, p. 145-162.

Research output: Contribution to journalArticle

@article{6564c6532742411195ca254bbbd11e6b,
title = "A live simulation-based investigation: Interactions with clients and their effect on audit judgment and professional skepticism",
abstract = "Threats to professional skepticism are embedded in the social relationships and interactions between auditors and management. These can affect auditor skepticism and the extent of audit procedures performed. In this study, we conduct an experiment using live simulation to create a realistic audit setting to investigate the effect of these interactions on professional skepticism. Each participant (n ¼ 49) completed a measure of trait skepticism and conducted an audit interview with a professional actor trained to play the role of a client controller. Findings indicate that, in general, participants who interview a friendly controller (rather than an intimidating controller) are less likely to determine questionable cash disbursements to be control exceptions and less likely to recommend more intensive follow-up. However, consistent with social psychology research on construct accessibility, planned contrasts indicate that participants who score low on trait skepticism are least likely to identify control exceptions and recommend more intensive follow-up when interviewing a friendly controller. This study advances research on professional skepticism by examining the impact that type of social interaction (friendly, intimidating) has on professional skepticism using a methodology (live simulation) that allows us to simulate a realistic audit environment. Use of this methodology increases external validity and generalizability of our findings. As a result, this study corroborates concerns that the social relationships/interactions between management and the auditor can be a threat to professional skepticism, and allows us to understand better how, when, and where these threats occur.",
keywords = "Audit, Interview, Live simulation, Professional skepticism",
author = "Trompeter, {Gregory M.} and Jared Eutsler and Norris, {Anne E}",
year = "2018",
month = "8",
day = "1",
doi = "10.2308/ajpt-51880",
language = "English (US)",
volume = "37",
pages = "145--162",
journal = "Auditing",
issn = "0278-0380",
publisher = "American Accounting Association",
number = "3",

}

TY - JOUR

T1 - A live simulation-based investigation

T2 - Interactions with clients and their effect on audit judgment and professional skepticism

AU - Trompeter, Gregory M.

AU - Eutsler, Jared

AU - Norris, Anne E

PY - 2018/8/1

Y1 - 2018/8/1

N2 - Threats to professional skepticism are embedded in the social relationships and interactions between auditors and management. These can affect auditor skepticism and the extent of audit procedures performed. In this study, we conduct an experiment using live simulation to create a realistic audit setting to investigate the effect of these interactions on professional skepticism. Each participant (n ¼ 49) completed a measure of trait skepticism and conducted an audit interview with a professional actor trained to play the role of a client controller. Findings indicate that, in general, participants who interview a friendly controller (rather than an intimidating controller) are less likely to determine questionable cash disbursements to be control exceptions and less likely to recommend more intensive follow-up. However, consistent with social psychology research on construct accessibility, planned contrasts indicate that participants who score low on trait skepticism are least likely to identify control exceptions and recommend more intensive follow-up when interviewing a friendly controller. This study advances research on professional skepticism by examining the impact that type of social interaction (friendly, intimidating) has on professional skepticism using a methodology (live simulation) that allows us to simulate a realistic audit environment. Use of this methodology increases external validity and generalizability of our findings. As a result, this study corroborates concerns that the social relationships/interactions between management and the auditor can be a threat to professional skepticism, and allows us to understand better how, when, and where these threats occur.

AB - Threats to professional skepticism are embedded in the social relationships and interactions between auditors and management. These can affect auditor skepticism and the extent of audit procedures performed. In this study, we conduct an experiment using live simulation to create a realistic audit setting to investigate the effect of these interactions on professional skepticism. Each participant (n ¼ 49) completed a measure of trait skepticism and conducted an audit interview with a professional actor trained to play the role of a client controller. Findings indicate that, in general, participants who interview a friendly controller (rather than an intimidating controller) are less likely to determine questionable cash disbursements to be control exceptions and less likely to recommend more intensive follow-up. However, consistent with social psychology research on construct accessibility, planned contrasts indicate that participants who score low on trait skepticism are least likely to identify control exceptions and recommend more intensive follow-up when interviewing a friendly controller. This study advances research on professional skepticism by examining the impact that type of social interaction (friendly, intimidating) has on professional skepticism using a methodology (live simulation) that allows us to simulate a realistic audit environment. Use of this methodology increases external validity and generalizability of our findings. As a result, this study corroborates concerns that the social relationships/interactions between management and the auditor can be a threat to professional skepticism, and allows us to understand better how, when, and where these threats occur.

KW - Audit

KW - Interview

KW - Live simulation

KW - Professional skepticism

UR - http://www.scopus.com/inward/record.url?scp=85058075865&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85058075865&partnerID=8YFLogxK

U2 - 10.2308/ajpt-51880

DO - 10.2308/ajpt-51880

M3 - Article

AN - SCOPUS:85058075865

VL - 37

SP - 145

EP - 162

JO - Auditing

JF - Auditing

SN - 0278-0380

IS - 3

ER -