Desirable effects and undesirable side effects of interventions aimed to improve auditors' exercise of professional skepticism
Johanns, Alex Jeffrey
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https://hdl.handle.net/2142/115299
Description
Title
Desirable effects and undesirable side effects of interventions aimed to improve auditors' exercise of professional skepticism
Author(s)
Johanns, Alex Jeffrey
Issue Date
2022-04-13
Director of Research (if dissertation) or Advisor (if thesis)
Hobson, Jessen L
Doctoral Committee Chair(s)
Peecher, Mark E
Committee Member(s)
Mendoza, Kim I
Napolitano, Chris M
Zhou, Yuepin D
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
professional skepticism
audit quality
wise-thinking disposition
individual differences
mindset
Abstract
I propose that the strength of auditors’ wise-thinking dispositions not only characterizes how they naturally exercise professional skepticism but moderates their responses to situational interventions aimed to help auditors exercise professional skepticism more appropriately. To explore these predictions, I conduct an experiment to examine interactions between the strength of auditors’ wise-thinking dispositions and two interventions that have been proposed in the audit literature: (1) revising the language used to frame auditing standards to include phrases designed to activate a more appropriately skeptical mindset; and (2) requiring auditors to document a minimum amount of evidence contrary to management’s assertions. I predict and find that these interventions help auditors who have weaker wise-thinking dispositions to exercise professional skepticism more appropriately and more efficiently, but also have potentially costly side effects as they reduce the efficiency with which auditors with stronger wise-thinking dispositions display professional skepticism. This study has implications for standard setters, regulators, and audit firms in their continued efforts to encourage auditors to appropriately exercise professional skepticism.
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