In your audit work, do you occasionally rely on data analytic tests developed by others, such as those provided by a centralized data analytics function within your firm? Have you ever created your own data analytic tests for your audit testing? Have you ever conducted an automated full population testing during your audit work? What advantages does it offer over sample testing? And have you also considered its potential drawbacks? Data analytics are often believed to offer significant benefits to the auditing process by enhancing its efficiency and effectiveness. However, two recent FAR studies reveal potential adverse effects of data analytics on auditors’ professional skepticism, particularly related to investigating fraud red flags. In this masterclass held by Xiaoxing Li and Anna Gold, we will present the most important findings of these studies and discuss what our findings mean for audit practice. Join the masterclass and explore how you can leverage these research findings to promote audit quality!
Our first study explores how inheriting a data analytic test developed by others, rather than developing one’s own, can hinder auditors’ application of professional skepticism. This insight raises important questions about the current practice of centralizing the data analytic test development activities and separating its development from its use. While benefiting efficiency, could this approach be hurting audit quality? We will dive into more details during the masterclass.[1]
Our second study examines the ongoing shift in audit practice from sample testing towards testing entire populations. We find that full population testing on client-internal data could have unintended consequence on auditors’ skepticism related to external red flags. This finding has important implications for audit firms’ quality control systems and training programs. Curious about why that happens and what you should be aware of? We will be sharing more details in the masterclass.[2]
After the presentation of the two studies (30 minutes), we will have a break-out activity (30 minutes) in which you will share your own experiences with other audit professionals, reflect on the practical implications of the research findings, and discuss related issues that future research should address. Finally, we will reconvene to discuss your break-out activity insights in a plenary session (30 minutes). The masterclass will be followed by drinks.
This masterclass is relevant for audit professionals at all levels of large and small firms who are interested in the topics of data analytics, full population testing, visualizations, fraud, evidence evaluation, and professional skepticism.
[1] “Inheriting vs. Developing Data Analytic Tests and Auditors’ Professional Skepticism” by Xiaoxing Li, Joseph Brazel, Anna Gold, and Justin Leiby. If you are eager to learn more about the study right now, see our FAR Practice Note.
[2] “An Unintended Consequence of Full Population Testing on Auditors’ Professional Skepticism” by Xiaoxing Li, Joseph Brazel, and Anna Gold. For more information, see our FAR Practice Note.
A livestream will be available, however it will not be possible to ask any questions or take part in any of the discussions through the livestream.
Back to overview.png?resolution=850x450&quality=95)
-
Date:
Xiaoxing Li & Anna Gold -
Location:
Nyenrode Business Universiteit, Arena Executive Zaal (Albert Heijn Building) -
📅 18 October 2024
⏰ 15.00 - 16.30 (CEST)
💰 Free
📍 Nyenrode Business Universiteit, Breukelen (livestream available) - Register here
Event starts in:
About the speakers
Xiaoxing Li PhD student
Xiaoxing Li is a PhD candidate at the Department of Accounting, Vrije Universiteit Amsterdam. Her research interests are auditors’ judgment and decision making. She is currently working on her PhD dissertation in the areas of audit technologies and auditors’ professional skepticism.
Prof. dr. Anna Gold
Anna Gold is Professor of Auditing at Vrije Universiteit Amsterdam and Adjunct Professor at Norwegian School of Economics (NHH). She earned her PhD at the University of Amsterdam. Her research interests are in the judgment and decision-making area, primarily applied to the field of auditing. Her research has focused on the impact of regulatory changes (e.g., fraud consultation, audit firm rotation, and auditor reporting standard changes) on judgments and decisions of auditors, preparers, and financial statement users. She has also examined how auditors and audit firms manage errors and whether varying the error management climate affects auditors’ error reporting willingness and learning. Her current work focuses on how auditors use specialist advice, the communication between auditors and audit committees, and auditors’ use of audit technology.
She has published her research in outlets such as The Accounting Review, Contemporary Accounting Research, Auditing: A Journal of Practice & Theory, Accounting Horizons, Journal of Business Ethics, and International Journal of Auditing. Professor Gold currently serves as editor at The Accounting Review (2020-2023) and Maandblad voor Accountancy en Bedrijfseconomie (since 2018). She is a member of the editorial board of Auditing: A Journal of Practice and Theory.