Information about the financial health of public companies provided by auditors ideally allows investors to make informed decisions and enhances the efficiency of financial markets. However, under the current system auditors are hired and fired by the companies they audit, which introduces incentives for biases that favor the audited companies. Three experiments demonstrate bias in auditors' ju...

.•\bstract—Theoretical research suggests that large auditors have more incentive to issue accurate reports compared to small auditors (DeAngelo. 1981; Dye, 1993). Controiling for the client characteristics of large and small auditors, this paper shows that large auditors issue reports that are more accurate and more informative signals of financial distress. These findings are consistent with t...

This study provides both survey and experimental evidence to consider how the interaction between staff-level auditors and client management may affect the auditors’ perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with client management. Survey evidence suggests that these staff-level auditor...

This study examines whether perceived ethical climate of the firm, exposure to ethics and moral reasoning have an influence on the ethical judgement of auditors in Malaysia. Analysis suggests that all three factors have positive and significant influence on the ethical judgement of auditors. This study also finds that the moral reasoning of majority of the auditors in Malaysia is contained with...

and two anonymous auditors for their helpful comments. ABSTRACT Previous field research suggests that there is an increasing need for auditors to rely more extensively on enquiry based evidence. This study investigates how using various theory-and practice-based based interventions can lead to a more rigorous enquiry process. Based on psycholo gy theory on planning and on goal setting, as well ...

Purpose – The purpose of this study is to examine whether client-specific litigation risk affects the audit quality differentiation between Big N and non-Big N auditors. Specifically, we examine whether higher quality audits of Big N auditors relative to nonBig auditors is more pronounced for clients with high litigation risk than for clients with low litigation risk. Design/methodology/approac...

Anecdotal evidence suggests that audit clients are automating more internal controls over time. Audit firms customarily respond to their clients’ increasing IT (information technology) risks by including more IT audit specialists in their external audit engagements. But, using IT audit specialists on the audit engagement to examine the IT risks that external financial statement auditors can exa...

This study investigates the relationships among industry specialist auditors, outside directors, and financial analysts. Specifically, we examine the effect of analyst coverage on the association between auditor industry specialization and outside directorship. We find that outside directors are less likely to hire industry specialist auditors for firms with high analyst coverage than for firms...

for management override of controls. Auditors are discouraged from placing too much reliance on client representation and are required to maintain a skeptical attitude throughout the audit. The standard encourages auditors to engage in frequent discussion among engagement personnel regarding the risk of material misstatement due to fraud. SAS 99 also requires auditors to inquire of management a...

BACKGROUND The Hawthorne effect, or behaviour change due to awareness of being observed, is assumed to inflate hand hygiene compliance rates as measured by direct observation but there are limited data to support this. OBJECTIVE To determine whether the presence of hand hygiene auditors was associated with an increase in hand hygiene events as measured by a real-time location system (RTLS). ...