How the Sleeper Effect Influences Auditors' Evaluations of Audit Evidence

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Abstract

Auditing standards require auditors to consider management sources when evaluating audit evidence. However, standards are silent on how auditors should identify and incorporate relevant source information into evidence evaluation. Psychology research highlights that source credibility is multi-dimensional and, importantly, competence, one dimension of credibility, is context-specific. An expert in one area may lack knowledge and experience in other areas. The “sleeper effect of the source,” a recently identified phenomenon, occurs when the persuasiveness of a weak message increases over time when delivered by a credible source. Using an experiment, we find that current auditing practices regarding management assessments result in auditors focusing on overall credibility, as opposed to context-specific competence, when evaluating audit evidence. When weak evidence is provided by a credible source, auditors are subject to a sleeper effect. We propose and test an audit documentation intervention that aids auditors in incorporating context-specific competence into evidence evaluations and moderates the sleeper effect.

Authors

• Jennifer McCallen, University of Georgia

• Christopher P Agoglia, University of Massachusetts-Amherst

• Bradley Bennett, University of Massachusetts-Amherst