How Simple Changes to Language and Tick Marks Can Curtail the Ghost Ticking of Audit Procedures.

• In Event: Investigating Audit Procedures

Abstract

Ghost ticking, or documenting audit work not actually performed, is a persistent concern as auditors face significant budgetary pressure, and poses a danger to the basis of the audit plan. For example, risk-based audit plans that rely heavily on controls testing to reduce or eliminate substantive tests in some areas can be based on spurious risk assessments if subordinate auditors ghost tick controls testing procedures. We examine whether requiring self-references in audit workpapers (i.e., “I” performed the controls test) in their workpapers can effectively curtail ghost-ticking, compared to two other types of language use common in workpapers. While recent research has focused on the importance of disclosure language in influencing investors judgments and decisions, our study focuses how language use influences the honesty and actions of the language user. We also design and test an alternative to tick marks (symbol-based notation commonly used to designate audit procedure results in workpapers), replacing them with automated “full explanations”, in which auditors select the full description of the result of each procedure performed from a drop-down list. Consistent with our hypotheses, we find that the use of self-references nearly eliminates ghost ticking, but only when auditors use automated explanations. Additional analyses suggest that the joint use of self-references and automated explanations (versus tick marks) increases the accessibility of their moral identity, which, in turn, reduces ghost ticking. Overall, we demonstrate how two simple changes to language and tick marks can significantly curtail ghost ticking. These changes are easily implementable in practice, and therefore could reduce the risk and implications of ghost ticking in auditing, especially when the clean results of audit tests are used to justify the elimination of further testing under a risk-based audit approach.

Authors

• Jessica Buchanan, Kent State University

• David Piercey, University of Massachusetts-Amherst