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Current Levels of Professional Skepticism: An Extension of Hurtt (2010)

Sat, January 17, 7:30 to 8:30am, TBA

Abstract

Hurtt (1999, 2010), using undergraduate students and Certified Public Accountants (CPAs), developed a scale designed to measure the trait of skepticism in individuals. She found that professional auditors scored significantly higher on the scale than undergraduate accounting students. We extend her results to Certified Fraud Examiners (CFEs) and compare her findings with pre Sarbannes-Oxley (SOX) auditors to a new sample of post Sarbannes-Oxley auditors.
The Public Company Accounting Oversight Board (PCAOB) has focused increasingly on auditors’ professional skepticism, or the lack thereof, in recent speeches, discussions and inspection reports. The Center for Audit Quality (CAQ) called for increased professional skepticism throughout the financial reporting process, including on the part of auditors, in its 2010 monograph, Deterring and Detecting Financial Reporting Fraud: A Platform for Action.
Professional skepticism is also important for CFEs. Professional Standards for Certified Fraud Examiners (Association of Certified Fraud Examiners, 2012) includes the requirement to exercise professional skepticism. We hypothesize that CFEs should score at least as high, on average, as professional auditors on the Hurtt Skepticism Scale (2010. The Hurtt scale was administered to 395 members, attendees and email contacts of ten ACFE chapters. Results show these attendees (319 of whom were CFEs) scored significantly higher (p<.06, p<.00000 for CFEs only) on the skepticism scale than the professional auditors in Hurtt (1999, 2010).
Given the recent emphasis on professional skepticism, our question is whether SOX and eleven years of regulation by the PCAOB have affected the level of professional skepticism for professional auditors. We use the Hurtt Skepticism Scale to compare the results from Hurtt’s 1999 sample of 200 professional auditors to 273 auditors who completed the scale in 2013 and 2014 to determine if professional skepticism has increased, decreased or remained the same. We find a statistically significant decrease in skepticism.
In addition, we examine the six individual dimensions of the scale to see how, or if, these dimensions may have changed over time for professional auditors and how both groups of auditors compare on these dimensions to CFEs.
NOTE: This paper is largely based on two previous papers: Pike and Smith (forthcoming) and Pike and Smith (2014).

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