Encouraging professional skepticism in the industry specialization era: a dual-process model and an experimental test

I develop a framework that elucidates how the primary target of auditors’ professional skepticism – audit evidence or their own judgment and decision making – interacts with other factors to affect auditors’ professional judgments. As an initial test of the framework, I conduct an experiment that examines how the target of auditors’ skepticism and industry specialization jointly affect auditors’ judgments. When working inside their specialization, auditors make more automatic, intuitive judgments. Automaticity naturally manifests for industry specialists as a result of industry experience, social norms to appear knowledgeable and decisive, and their own expectations to proficiently interpret audit evidence. Priming industry specialists to be skeptical of audit evidence, therefore, has little influence on their judgments. In contrast, priming such auditors to be skeptical of their otherwise automated, intuitive judgment and decision making substantially alters their decision processing. They begin to question what they do and do not know, in an epistemological sense and, as a result, elevate their overall concern about material misstatements due to well-concealed fraud. This pattern of results is consistent with my framework’s predictions and suggests that specialization is more about improving the interpretation and assimilation of domain evidence rather than enhancing reflective, self-critical thinking. It also suggests it would be beneficial to identify other factors that promote industry specialists’ skepticism towards their judgment and decision making to make them more circumspect about the possibility of management fraud (cf., Bell, Peecher, and Solomon 2005).

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

2010

Author dc:creator

• Grenier, Jonathan H.

Contributors dc:contributor

• Peecher, Mark E.
• Solomon, Ira
• Elliott, W. Brooke
• Roese, Neal J.

• Professional skepticism
• professional judgment
• industry specialization
• fraud
• preemptive self-criticism
• dual-process models

Statement dc:rights

• Copyright 2010 Jonathan H. Grenier

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/16041

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/16041