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2017 | OriginalPaper | Buchkapitel

2. Experimental Study

verfasst von : Carmen Olsen

Erschienen in: A Study of Professional Skepticism

Verlag: Springer International Publishing

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Abstract

In this chapter follows the structure of a classical article in order to present an experimental study on auditors’ professional skepticism. The title of the experimental study is “The Effects of Situational Professional Skepticism and Affect on Auditors’ Skeptical Judgments: A Two-System Theory Perspective”. This study is coauthored with Professor Iris, Stuart at the Norwegian School of Economics. In this study, professional skepticism is seen as a “black box” because the cognitive processes behind it are unknown. We experimentally investigate whether and how the interaction between professional skepticism and interpersonal affect influences auditors’ skeptical judgments through a Two-System theory perspective. We use a two (high client risk versus low client risk) by two (positive versus negative affect) experimental design. We find a significant interaction between risk and affect. Our findings suggest that the influence of affective cues on auditors’ skeptical judgments, will depend on the level of risk in the client engagement. Our study identifies affective reactions as important components of setting the level of professional skepticism and argues that the key in applying the right level of professional skepticism is in switching to the deliberate System 2 cognitive decision process under high risk conditions.

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Vorheriges Kapitel Auditors’ Professional Skepticism

Nächstes Kapitel The Experimental Instrument

In International Standards on Auditing (ISA) professional skepticism is defined as “[a]n attitude that includes a questioning mind, being alert to conditions which may indicate possible misstatement due to error or fraud, and a critical assessment of audit evidence” (IFAC 2009, 77).

Hard-wired describes the fact that emotions, feelings and affective reactions toward objects, subjects or in decision-making will occur in humans intuitively such in the case of affect heuristics (Kahneman 2011).

Despite the importance of professional skepticism, it is described as a black box (DeFond and Zhang 2014). We use the term of black box here because nobody really knows what professional skepticism is. For instance, professional skepticism is ill-defined (Hurtt et al. 2013), researchers are faced with conflicting perspectives on professional skepticism (Shaub 1996; Nelson 2009; Hurtt et al. 2013), there is no single comprehensive measure of it (Quadackers 2009), and we lack a precise theory that explains professional skepticism.

Non-diagnostic information refers to information that is not useful for making a judgment or a choice.

The decision maker uses affect heuristics as a short-cut when he uses affect as an important cue in the decision process instead of engaging in effortful search for information involving the deliberative reasoning system (Kunda 1999; Slovic et al. 2002; Kahneman 2011).

Hackenbrack (1992) argues that experiments that only look to the effects of non-diagnostic evidence with diagnostic evidence have a narrow focus because the experimental results are not producible in real worlds. The dilution effect refers to the fact that participants’ judgments will be less extreme when non-diagnostic evidence is mixed with diagnostic evidence. Thus, the lab results are often a result of the dilution effect where non-diagnostic evidence dilutes the effects of diagnostic evidence. The magnitude of this effect is dependent on whether the non-diagnostic information is able to attract the participant’s attention. He recommends that experiments ask participants to justify their judgments or use decision aids, as this is often the case in a real world environment, to avoid the hypothetical dilution effect and insure that experimental results have real world implications.

Trait skepticism is the term used to describe “a relatively stable and enduring aspect of an individual” (Hurtt 2010, 150). By contrast, state skepticism is a “temporary condition aroused by situational variables” (Hurtt 2010, 150).

See section 316 Consideration of Fraud in a Financial Statement Audit paragraph 68 Assessing risks of material misstatement due to fraud throughout the audit, under Problematic or unusual relationships between the auditor and management.

One hundred and twenty-eight auditors participated in the study. We dropped 12 participants who did not complete the questionnaire and 57 did not pass the manipulation checks on both affect and on skepticism. We limited our sample to 59 auditors who passed the manipulation checks because we want to understand those auditors who are sensitive to environmental changes. Of these 59 auditors, 20 completed the questionnaires online and 39 completed the questionnaires on paper as shown in Table 2.2.

The participant had more than 5 years audit experience and therefore is kept here in the sample.

To find the auditors exhibiting System 1 and System two type of judgments has been challenging but also it is not unusual as often in other disciplines it is the only way to understand a phenomenon. See how researchers recruit the right sample to provide new knowledge related to schizophrenia (Kompus et al. 2013) on the University of Bergen website: http://www.uib.no/en/news/36390/help-hand-schizophrenics (downloaded December 5, 2014).

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Titel: Experimental Study
verfasst von: Carmen Olsen
Verlag: Springer International Publishing
Buch: A Study of Professional Skepticism
Print ISBN: 978-3-319-49895-9

Electronic ISBN: 978-3-319-49896-6

Copyright-Jahr: 2017
DOI: https://doi.org/10.1007/978-3-319-49896-6_2