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ABSTRACT Audit partners may be called upon to evaluate, ex post, the work of another auditor. One example of such an evaluation is a Peer Review. An experiment was conducted [...]

The author comments on the article "Improving Jurors' Evaluations of Auditors in Negligence Cases," by Kathryn Kadous. The article examined the effect of bias on jurors' decisions on negligence cases involving auditors. Kadous' article also proposed a theoretical framework for the possible influence of knowledge of a negative outcome on the evaluative judgments of jurors in an auditor negligence trial. The author expresses his concerns about the article's theoretical background, experimental design, and analysis of results.

This paper examines the relationship between audit seniors discussing their own experiences with committing and correcting errors (modeling fallibility), and audit juniors' thinking about errors and error communication (openly discussing their own self-discovered errors). The paper investigates the direct relationship between senior modeling fallibility and juniors' responses, and whether the relationship is mediated through error strain and error-related self-efficacy. Survey data from 266 audit juniors from two Big 4 Canadian accounting firms showed a direct positive association between audit senior modeling fallibility and audit juniors' thinking about errors, and error communication. This relationship is positively mediated through error-related self-efficacy. We also found that the relationship is mediated by error strain. However, although audit senior modeling fallibility was associated with reduced error strain, error strain was positively related to both thinking about errors and error communication, contrary to our hypothesis. The paper discusses the theoretical and practical implications of these results. [ABSTRACT FROM AUTHOR]

This paper reports the results of an experiment examining the framing bias and a potential debiasing technique. Practicing auditors formed a judgment about a hypothetical client's inventory internal control system to determine the amount of related substantive testing. Auditors from two Big Six firms were randomly assigned to one of four treatments in a fully crossed 2 x 2 between-subjects design. The initial description of the internal control system was identical for all treatments, as were the items of additional evidence about the system. Auditors either judged the risk of the control system or the strength of the control system. The risk-strength frames were crossed with two levels of debiasing technique: "none" or "evidence rating." Results indicate that without debiasing, significant framing effects were present, but that evidence rating significantly mitigated the framing effect. In this auditing context, the framing bias appears to be easily induced, but is not robust. Although the profession should be aware of this potential problem, effective remedial or proactive steps can be easily implemented and may naturally occur in current practices. [ABSTRACT FROM AUTHOR]

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Regulators consider lack of professional skepticism to be a major cause of audit deficiencies and are concerned that auditors are more willing to accommodate less conservative accounting policies in clients employing a former partner of their firm because of diminished skepticism. This study examines the impact of audit firm alumni serving as senior members of client's management on auditor's skeptical judgment. In a controlled experiment with three different conditions, audit managers assessed the potential impairment of goodwill. The results indicate that auditors are more likely to make a judgment that agrees with the client's position when the CFO is a former engagement partner from their firm and are more confident in the CFO's position when the CFO is a former Big 4 partner, whether from their own firm or another firm, than when the CFO is not identified as having any affiliation with any audit firm. Together, these results suggest that there is an alumni effect and that the effect is also partially influenced by the differing levels of auditor's confidence in the CFO's position as a consequence of the CFO's known or unknown affiliation with Big 4 firms. [ABSTRACT FROM AUTHOR]

Presents practice summaries preceding main articles. Debiasing the outcome effect, the role of instructions in an audit litigation setting; Big 5 auditors' professonal and organizational identification; Effects of decision aid orientation on risk factor identification and audit test planning; Others.

Presents a survey of practicing professionals in Big 6 firms in Vancouver, British Columbia to evaluate the job performance of auditors. Level of superior-subordinate congruence in the importance of aspects of job performance as an individual progresses through the ranks; Description of how performance criteria dimensions change as auditors progress through positions.

Comments on the theories of framing and presentation modes with regard to auditing practices. Reference to a study by Jean Bédard; Investigation of strategies for mitigating the framing effect; Operationalization of the sequential mode; Internal validity.