The Case of Delish Pasta: Lack of Auditor Skepticism, Management Biases, and the Slippery Slope

• In Event: Breakfast and Research Forum
  In Roundtable Session: Table 17: Professional Skepticism

Abstract

The financial reporting fraud case provided promotes recognition and understanding of the six characteristics of professional skepticism (Hurrt 2010) and the effect of lack of professional skepticism on audit quality. The case is an example of the “slippery slope” phenomena (Center for Audit Quality 2010), highlighting the effect management biases has on the representations made to outsiders and the quality of financial reporting. In addition, the case, based on factual events, provides the instructor an example of how weaknesses suggested by the fraud triangle, ineffective corporate governance, and a lack of professional skepticism by auditors can contribute to audit failure. The supplemental materials provided may be used to update or extend current teaching resources in either an undergraduate or graduate class in auditing.

Author

• Theresa Presley, Kansas State University