Improving Auditors' Professional Skepticism through Understanding Process and Outcome Accountability

• In Event: Fraud and Professional Skepticism

Abstract

Professional skepticism lies at the core of audit judgment. Responding to concerns about the inadequacy of professional skepticism (e.g. PCAOB, 2011, 2012), we investigate process and outcome accountability through which auditors may be encouraged to employ greater (or lower) levels of professional skepticism. Consistent with expectations, we find that auditors show greater levels of professional skepticism when they are expected to justify their judgment process, rather than their final judgments. Our results also reveal that the professional skepticism of novice auditors improves to a greater extent than that of more experienced auditors. Although outcome accountability may be more influential in an audit setting, process accountability may better promote professional skepticism in auditors, and more effectively so in the case of less experienced auditors. These findings have important implications for the accountability structure underlying audit practice and training.

Authors

• Sarah Yeonjeung Kim, The University of New South Wales

• Yichelle Y Zhang, The University of Sydney