Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Why are auditors blamed when something goes wrong? Experimental evidence

Why are auditors blamed when something goes wrong? Experimental evidence Audit firms claim that they are used as the whipping boy when something goes wrong, either because of the public's poor knowledge of the auditing function or because financial incentives exist to blame the audit firm. An alternative explanation is that audit firms' active communication of their assurance provider role causes blaming behavior. We investigate these different explanations based on a 2 × 2 between‐subjects experiment in which we manipulate financial incentives to blame the audit firm and the audit firm's communication strategy. Three weeks in advance of the experiment we administered an auditing knowledge questionnaire to the participants to include their auditing knowledge levels into our study. We find that audit firms with “deep pockets” and an active assurance provider communication strategy receive significantly higher blame, and that poor knowledge of auditing is associated with higher blame. Furthermore, when a firm uses an assurance provider communication strategy, then it receives higher blame from participants with high (relative to low) auditing knowledge. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

Why are auditors blamed when something goes wrong? Experimental evidence

Loading next page...
 
/lp/wiley/why-are-auditors-blamed-when-something-goes-wrong-experimental-qCDwrhO6ux
Publisher
Wiley
Copyright
© 2018 John Wiley & Sons Ltd
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/ijau.12126
Publisher site
See Article on Publisher Site

Abstract

Audit firms claim that they are used as the whipping boy when something goes wrong, either because of the public's poor knowledge of the auditing function or because financial incentives exist to blame the audit firm. An alternative explanation is that audit firms' active communication of their assurance provider role causes blaming behavior. We investigate these different explanations based on a 2 × 2 between‐subjects experiment in which we manipulate financial incentives to blame the audit firm and the audit firm's communication strategy. Three weeks in advance of the experiment we administered an auditing knowledge questionnaire to the participants to include their auditing knowledge levels into our study. We find that audit firms with “deep pockets” and an active assurance provider communication strategy receive significantly higher blame, and that poor knowledge of auditing is associated with higher blame. Furthermore, when a firm uses an assurance provider communication strategy, then it receives higher blame from participants with high (relative to low) auditing knowledge.

Journal

International Journal of AuditingWiley

Published: Nov 1, 2018

Keywords: ; ; ;

References