The Influence of Documentation Specificity and Priming on Auditors’ Fraud Risk Assessments and Evidence Evaluation Decisions

Abstract

In the article “The Influence of Documentation Specificity and Priming on Auditors’ Fraud Risk Assessments and Evidence Evaluation Decisions”, which appeared in The Accounting Review, the authors are explaining about the results of a study that was conducted concerning how documentation of fraud planning discussions affects auditors’ subsequent fraud risk assessment. Using the Support Theory, they experimentally investigate how the specificity of fraud risk documentation during audit planning influences auditors’ subsequent audit work. They also examined the effect of priming auditors about the fraud risks identified during planning before they begin subsequent evidence evaluation. They found that auditors’ planning stage efforts affect subsequent fraud risk assessments and evidence evaluation decisions. Unprimed auditors who receive more specific documentation increase their fraud risk assessments and evidence requests.

I. Introduction

The study examined how documentation of fraud planning discussions affects auditors’ subsequent fraud risk assessments, issue identification, and collection of additional evidence. Fraud investigation is an important part of the financial statement audit, yet the PCAOB is concerned that auditors’ mindsets are too compliance-oriented and insufficiently fraud-oriented, especially during evidence evaluation. Following an inspection by the PCAOB, the team concluded that auditors gave insufficient attention to fraud risks in subsequent audit work even when “auditors examined transactions warranting further fraud risk consideration”. (Hammersly, Jacqueline S., p.548) This conclusion backed up their initial suggestion that insufficient documentation of the fraud-related planning judgments may undermine audit team members’ subsequent reliance on this planning work. (Hammersly, Jacqueline S., p.548) Due to the fact that previous research on fraud risk assessment focused on the planning stages, there is not enough information on...