FAR Vlog#2 with Anna Gold: ‘How can audit committee support improve auditor’s applications of professional skepticism?’

Anna Gold is professor of auditing at the Vrije Universiteit Amsterdam and adjunct professor at the Norwegian School of Economics in Bergen. Anna’s research interests lie in the judgment and decision-making area, primarily applied to the field of auditing. In this FAR Vlog she talks about the project that she is working on with Justin Leiby (Illinois USA) Joseph Brazel (North Carolina State University) and Tammie Schaefer (University of Missouri) about ‘How can audit committee support improve auditor’s applications of professional skepticism?’

The project is about the potential support that audit committees can give to audit teams. An often-mentioned problem by regulators, as well as by audit firms themselves, is that there might exist a lack of professional skepticism among auditors. Most research in this area has focused on what can be done to boost auditors’ professional skepticism. The perspective of this study is the role the audit committee plays, or potentially can play, in stimulating professional skepticism. The particular focus is on the effect of a supportive audit committee on the professional skepticism of lower leveled senior auditors.  

An exploratory survey study has already been conducted, in which the state of the art of this relationship has been explored. Does it help auditors to be skeptical if the audit committee is active and supportive? What are the best practices? One of the findings, based on our US-data, is that an audit committee often mainly communicates with the higher-level audit team members. One best practice would be to improve the interaction and extend the communication to lower level audit team members. Another best practice would be to ask the audit committee more questions, to challenge them more, which also improves will committee’s own skepticism. 

In the next phase, an experiment will be conducted in which the effect of factors related to audit committee support on skeptical behavior is examined.