Desirable effects and undesirable side effects of interventions aimed to improve auditors' exercise of professional skepticism

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.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Accountancy

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2022

Author dc:creator

• Johanns, Alex Jeffrey

Contributors dc:contributor

• Hobson, Jessen L
• Peecher, Mark E
• Mendoza, Kim I
• Napolitano, Chris M
• Zhou, Yuepin D

• professional skepticism
• audit quality
• wise-thinking disposition
• individual differences
• mindset

Statement dc:rights

• Copyright 2022 Alex Johanns

Language dc:language

en, eng

Handle dc:identifier

https://hdl.handle.net/2142/115299

OAI record oai:identifier

https://www.ideals.illinois.edu/oai-pmh?verb=GetRecord&metadataPrefix=etdms&identifier=oai%3Awww.ideals.illinois.edu%3A2142%2F115299