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FAR Working Paper - Professional Skepticism Traits and Fraud Brainstorming Quality
Dr. Kris Hardies Prof. dr. Ann Vanstraelen Dr. Sanne Janssen Prof. Karla Zehms
Working Papers Professional Skepticism
15-12-2020
Details
 

Auditing standards emphasize that fraud detection is an important objective of an audit and require the exercise of professional skepticism (PS) and a discussion among the engagement team to prevent and detect fraud. The purpose of this study is to examine whether professional skepticism is a driver of fraud brainstorming quality. We investigate the relationship between fraud brainstorming quality, using the measure of Brazel et al. (2010), and auditor’s professional skepticism traits. Using proprietary data from Dutch audit firms on 125 engagements, we find that neutral trait skepticism and professional moral courage of the partner have a significant effect on fraud brainstorming quality. We observe a higher attendance rate and contribution of specialists, more extensive discussion, longer preparation, and longer sessions for engagements led by partners with high neutral trait skepticism and high moral courage. We find no significant results for partners with a high presumptive doubt trait. Additional cross-sectional analyses show that the effect of professional skepticism on FBQ depends on situational, organizational conditions.

Authors

Dr. Kris Hardies

Kris Hardies obtained his Ph.D. from the Vrije Universiteit Brussel in 2011, worked at the University of Florida in 2012 and is currently an associate professor at the Universiteit Antwerpen where he teaches accounting and auditing at the BSc and MSc level. His research interests include professional skepticism, personality and individual differences, capital markets and firm behavior, and gender inequality. His recent research focuses on the effects of personality and individual differences among auditors on audit quality. His work has been published in journals such as Auditing: A Journal of Practice & Theory, Accounting Horizon, European Accounting Review, International Journal of Auditing, and Economics Letters.

Prof. dr. Ann Vanstraelen

Ann Vanstraelen is Full Professor of Accounting and Assurance Services at Maastricht University and serves as Head of the department of Accounting and Information Management. She coordinates the multidisciplinary research theme "Culture, Ethics and Leadership". She earned her PhD at the University of Antwerp. Her research interests relate to the broad field of auditing and assurance services, governance, corporate reporting and disclosure, with a specific focus on the quality of accounting and auditing practices. 

 


Dr. Sanne Janssen

PhD Researcher at University of Antwerp & Maastricht University

Prof. Karla Zehms
FAR Working Paper - Auditors’ Professional Skepticism: Traits, Behavioral Intentions, and Actions
Dr. Kris Hardies Prof. dr. Ann Vanstraelen Dr. Sanne Janssen Prof. Karla Zehms
Working Papers Professional Skepticism
15-12-2020
Details
 

Auditors’ professional skepticism is critical to applying auditing standards and achieving audit quality. Prior research provides measures of skepticism in general, and auditor-specific trait skepticism. Other research develops and tests a theoretical model of auditor professional skepticism, positing factors that contribute to skeptical intentions and skeptical actions. In this paper, we provide an empirical test of these measures and theories, examining individual differences and personality traits that affect trait-based professional skepticism, testing the associations between factors related to behavioral intentions toward skepticism, and revealing their collective association with skeptical actions. We use data from a sample of 663 auditors across all ranks from staff through partner who each completed an experiential questionnaire relating to one of their actual audit engagements. We find that individual differences (gender, experience, and knowledge) are associated with differential levels of professional trait skepticism, as are personality traits (agreeableness, conscientiousness, openness, narcissism and psychopathy).

Authors

Dr. Kris Hardies

Kris Hardies obtained his Ph.D. from the Vrije Universiteit Brussel in 2011, worked at the University of Florida in 2012 and is currently an associate professor at the Universiteit Antwerpen where he teaches accounting and auditing at the BSc and MSc level. His research interests include professional skepticism, personality and individual differences, capital markets and firm behavior, and gender inequality. His recent research focuses on the effects of personality and individual differences among auditors on audit quality. His work has been published in journals such as Auditing: A Journal of Practice & Theory, Accounting Horizon, European Accounting Review, International Journal of Auditing, and Economics Letters.

Prof. dr. Ann Vanstraelen

Ann Vanstraelen is Full Professor of Accounting and Assurance Services at Maastricht University and serves as Head of the department of Accounting and Information Management. She coordinates the multidisciplinary research theme "Culture, Ethics and Leadership". She earned her PhD at the University of Antwerp. Her research interests relate to the broad field of auditing and assurance services, governance, corporate reporting and disclosure, with a specific focus on the quality of accounting and auditing practices. 

 


Dr. Sanne Janssen

PhD Researcher at University of Antwerp & Maastricht University

Prof. Karla Zehms
FAR Practice Note - Internal control quality and audit quality: the role of financial analysts
Prof. dr. Christian Hofmann Dr. Jeroen van Raak Dr. Nina Schwaiger Sebastian Kuhn PhD student
Practice Notes - Practitioner's Notes
16-11-2020
Details
 

This project studies the role of internal control quality during the audit process and proposes a new source which auditors can use to gain information on control risk.

The study aims at understanding the relevance of internal control quality for audit quality and identifying an information channel which may help auditors to assess internal control quality more accurately and efficiently. Since financial analysts are typically macroeconomic experts and have profound industry knowledge, they are arguably able to form a relatively precise assessment of fraud risk. In this context, the team views fraud risk and internal control quality as two sides of the same coin. Financial analysts have an incentive to acquire information on fraud risk (including governance and controls) as undetected fraud negatively affects the quality of financial statements, which are an essential information source of financial analysts’ earnings forecasts. Moreover, analysts explicitly and implicitly include their assessment of fraud risk during earnings conference calls as well as in their analyst reports, which provide an overview of the information that analysts collected of their covered firms and include buy or sell recommendations. Consequently, they argue that the information provided by financial analysts may be a valuable information source for auditors to more accurately and efficiently assess inherent and control risk.

Authors

Prof. dr. Christian Hofmann
Dr. Jeroen van Raak
Dr. Nina Schwaiger
Sebastian Kuhn PhD student
Economic Consequences of Joint Audits - Prof. dr. A. Schatt (FAR Conference editorial)
Prof. dr. Alain Schatt
Conference Proceedings
19-10-2020
Details
 

During the FAR International Conference on 22 June 2020, professor Alain Schatt (University of Lausanne) presented a literature review on the use of joint audits in France. Schatt elaborated on the potential economic consequences of the joint audit in terms of market concentration, audit costs and audit quality. As also concluded in the AFM report, the current approach to the joint audit in France is not working as desired. In practice, the joint auditors simply divide the audit work and the smaller parties perform the easiest part.

Authors

Prof. dr. Alain Schatt

Alain Schatt is Full Professor of Financial Accounting at HEC Lausanne, University of Lausanne.

Before joining HEC Lausanne, he has held different positions in academia. His research focuses on financial reporting, corporate governance and the audit market. In particular, he is interested in the consequences of specific regulations on audit quality and on the value of public firms.

PhD Dissertation - The ins and outs of professional skepticism
Dr. Sanne Janssen
PhD Dissertations
25-09-2020
Details
 

The objective of an external audit is to provide assurance to the users of financial statements on the quality of the reported information. A quality audit is therefore essential for the functioning of capital markets. The exercise of professional skepticism is often described as a key attribute for a quality audit. However, despite its alleged importance, the concept of professional skepticism is not well understood. This dissertation advances our understanding of professional skepticism by investigating professional skepticism traits as input factors, and as drivers of process and output factors of the audit. Results of this dissertation show that professional skepticism traits of auditors are significantly affected by personality traits and other individual differences, and differ significantly across ranks. Further, it shows that professional skepticism ultimately affects audit quality as professional skepticism traits are significant drivers of certain audit process and output factors. The holistic approach used in this dissertation allows me to provide recommendations for practitioners to enhance the exercise of professional skepticism.

Authors

Dr. Sanne Janssen

PhD Researcher at University of Antwerp & Maastricht University

FAR Literature Review - Internal Control Quality and Audit Quality
Prof. dr. Christian Hofmann Dr. Jeroen van Raak Dr. Nina Schwaiger Sebastian Kuhn PhD student
Literature Reviews
21-09-2020
Details
 

This literature review highlights the role of internal controls in the audit process. We find that internal controls are of high economic importance for both the auditor and the client firm, as audit failure has severe consequences on both sides. In general, auditors can reduce the negative effects of weak internal controls on corporate financial reporting quality through increasing audit effort, which is associated with an increase in audit fees. However, increased effort does not fully preclude financial misstatements, i.e., a substantial risk of financial misstatement remains. While the reasons for this are not fully clear, the audit of internal controls is an extremely complex matter. In addition, auditors are subject to significant time and personnel constraints during the audit. This leads us to believe that the use of additional sources of private information on internal control quality could have strong positive consequences for both the auditor and, subsequently, the client firm. We suggest that financial analysts, their discussions during earnings conference calls and the information provided in their reports may be a valuable source of information for auditors. In particular, financial analysts’ assessment of fraud risk may help auditors to more efficiently and accurately assess internal control quality.

Authors

Prof. dr. Christian Hofmann
Dr. Jeroen van Raak
Dr. Nina Schwaiger
Sebastian Kuhn PhD student
FAR Practice note and Working Paper - Economic Consequences of Joint audits
Prof. dr. Alain Schatt Prof. dr. Jean Bédard
Practice Notes - Practitioner's Notes Working Papers
17-09-2020
Details
 

Authors

Prof. dr. Alain Schatt

Alain Schatt is Full Professor of Financial Accounting at HEC Lausanne, University of Lausanne.

Before joining HEC Lausanne, he has held different positions in academia. His research focuses on financial reporting, corporate governance and the audit market. In particular, he is interested in the consequences of specific regulations on audit quality and on the value of public firms.

Prof. dr. Jean Bédard

Jean Bédard is professor at Laval University in Québec City. 

His research covers various audit subject matters and research methods; spanning, for example, auditor expertise, audit committees and corporate governance, internal control systems, professional ethics, regulation of the accounting profession, auditor judgment, and auditor report, employing experimentation, interviewing, field work, and empirical archival methods. 

The Future of Assurance in Capital Markets (Forthcoming in Accounting Horizons)
Prof. dr. Robert Knechel
Other Publications
27-07-2020
Details
 

Efficient capital markets rely on a continuous supply of reliable and timely information and auditors are critical to this process. The economic value of an audit derives from making information more reliable to users (i.e., to reduce the risk of erroneous or manipulated information influencing the judgments of market participants). Traditionally, the focus of auditing has been on annual financial reports; however, given the speed of information creation and dissemination, the role of auditors may need to adapt or expand in the future. There are three areas where auditors might help improve information quality: (1) non-GAAP earnings, (2) ESG reporting, and (3) cybersecurity risks disclosures. To provide assurance over these types of information, audit firms need to identify the appropriate subject matter for assurance, obtain the expertise to provide assurance, develop a verification process for providing assurance, and commit to a system of organizational support for the assurance process. Multidisciplinary practices have the potential to provide expanded assurance over more information, as well as assurance related to the processes that generate the information. However, success is not inevitable, and market, social, and regulatory forces will have much to say about the emergence of new assurance initiatives.

Authors

Prof. dr. Robert Knechel

Knechel is a professor at the University of Florida Fisher School of Accounting since 1981. He is also a Visiting Research Professor of Auditing at the University of Auckland Business School, Research Professor in Auditing at KU Leuven and Visiting Professor Accounting & Information Management at the University of Maastricht. Knechel is a member of the Standing Advisory Group of the Public Company Accounting Oversight Board and a board member of The Foundation for Auditing Research. Knechel received his B.S. in Accounting from the University of Delaware and his Ph.D. from the University of North Carolina at Chapel Hill. In june 2018, Knechel received an honorary doctorate from BI Norwegian School of Business. 

ESB: Accountants doorgelicht
Other Publications
09-07-2020
Details
 

ESB 4787S: Accountants doorgelicht


Dit ESB-dossier heeft tot doel bij te dragen aan de kennisdeling op het gebied van accountancyonderzoek. Er is veel onderzoek gedaan naar de kwaliteit van accountantscontroles en de veranderende rol van de accountant als gevolg van technologische ontwikkelingen en een sterkere focus op duurzaamheid in het bedrijfsleven. Toch is deze wetenschappelijke kennis tamelijk onbekend in het maatschappelijke debat.

Met bijdragen van o.a. Arnoud Boot, Bart Stellinga, Mijntje Lückerath-Rovers, Robin Litjens en Leo van der Tas, Barbara Baarsma, Willem Buijink en Sanne Janssen wordt een verdere nadruk gelegd op het belang van de accountant en de rol in het bedrijfsleven.

Authors

FAR Working Paper - Moving Audit Teams Forward: Designing firm environments for sustainable learning from errors
Prof. dr. Wim Gijselaers Prof. dr. Roger Meuwissen RA Dr. Therese Grohnert
Working Papers
08-07-2020
Details
 

Over the past ten years, oversight bodies, regulators, governments, and clients have been demanding audit firms deliver higher audit quality, closing the expectations gap. As a response, audit firms have been working on developing and implementing new procedures, structures and audit programs.

However, this ‘hard’ approach has not yielded the desired improvements. 

Authors

Prof. dr. Wim Gijselaers

Wim Gijselaers is full professor in educational research, in the School of Business and Economics at Maastricht University, the Netherlands. His research focuses on educational innovation in higher education, social determinants of team cognition and team performance, and judgment and decision making in management and accounting. His educational development work focused on the further development of Problem-Based Learning within Business Education. Next to teaching in the award-winning Master program Management of Learning, he teaches as visiting professor at the University of Bern (Switzerland) in a post-graduate program for Health Care Professionals. Wim is member of advisory boards of universities in Germany and Switzerland, and serves as chief-editor of the Springer Book Series Innovation and Change in Professional Education. Next, he is affiliated with the consulting firm Learning Miles (based in Helsinki). In this role he has presented workshops for Scandinavian-based companies on topics of Innovation and Change. He was co-founder and chair of the EDINEB network in the Nineties. Next, he was the founding editor of the Springer Book Series Educational Innovation in Economics and Business. He served positions as Program Director of International Business, and Associated Dean of Education. Currently he is chair of the department of Educational Research and Development, at the School of Business and Economics (Maastricht University). Several of his PhD’s received awards for their PhD Thesis, or papers presented at meetings of the American Educational Research Association, the Association for the Advancement of Computing in Education, and the EARLI Special Interest Group 14 “Learning and Professional Development”. Together with Professor Ann Vanstraelen he coordinates the GSBE research project "Culture, Ethics, and Leadership": https://www.maastrichtuniversity.nl/research/institutes/gsbe/gsbe-research.

Prof. dr. Roger Meuwissen RA
Dr. Therese Grohnert
FAR Literature Review - Audit Committees and Audit Quality
Prof. dr. Ann Vanstraelen Dr. Sanne Janssen Dr. Mathijs van Peteghem Dr. Caren Schelleman Dr. Ulrike Thürheimer Prof. dr. Ganesh Krishnamoorthy Dr. Rogier Deumes
Literature Reviews
26-06-2020
Details
 

The purpose of this literature review is to provide an overview of the academic literature on the relationship between audit committees (ACs) and audit quality (AQ). The starting point for our review is the most recent comprehensive overview of literature on corporate governance research in accounting and auditing by Carcello et al. (2011a). We start from their findings and conclusions, and add our review of studies on the relationship between ACs and AQ for the most current period, starting with 2011. In doing so, we draw from the IAASB (2014) conceptual framework on AQ that presents the key input, process and output factors that contribute to AQ.

Authors

Prof. dr. Ann Vanstraelen

Ann Vanstraelen is Full Professor of Accounting and Assurance Services at Maastricht University and serves as Head of the department of Accounting and Information Management. She coordinates the multidisciplinary research theme "Culture, Ethics and Leadership". She earned her PhD at the University of Antwerp. Her research interests relate to the broad field of auditing and assurance services, governance, corporate reporting and disclosure, with a specific focus on the quality of accounting and auditing practices. 

 


Dr. Sanne Janssen

PhD Researcher at University of Antwerp & Maastricht University

Dr. Mathijs van Peteghem

Assistant Professor at Maastricht University & Doctoral researcher KU Leuven

Dr. Caren Schelleman
Caren Schelleman is an assistant professor at the Department of Accounting and Information Management at Maastricht University School of Business and Economics. She has also been a visiting professor at the University of Auckland, New Zealand. Caren coordinates and teaches courses on internal control and auditing at both undergraduate and graduate levels. She has presented papers at Annual Congresses of the European Accounting Association, Midyear Meetings of the Audit Section of the American Accounting Association, the International Symposium on Audit Research, conferences of the European Auditing Research Network, and at several workshops and seminars in Europe and the US. Her research interests include auditing, assurance services, internal control, and corporate governance, both from an economic and a behavioral point of view.


Dr. Ulrike Thürheimer

Ulrike joined the School of Accounting at UNSW Sydney in August 2020. Prior to that, she completed her PhD in Auditing at Maastricht University, the Netherlands. Ulrike's research centers around audit quality. She is interested in how inputs to the audit, the audit process and contextual factors affect audit production and audit quality. Specifically, her research investigates the quality of group audits, the effectiveness of public oversight and auditor's incentives from regulation and litigation. 

Prof. dr. Ganesh Krishnamoorthy

Professor Ganesh's primary areas of research interest include corporate governance, audit judgment, and internal auditing. 

He has extensive work experience in public accounting and in industry that spans several countries including India, Liberia (West Africa), and the United States.

Dr. Rogier Deumes
FAR Practice Note - Audit Committee Involvement and Audit Quality
Prof. dr. Ann Vanstraelen Dr. Sanne Janssen Dr. Mathijs van Peteghem Dr. Caren Schelleman Dr. Ulrike Thürheimer Prof. dr. Ganesh Krishnamoorthy Dr. Rogier Deumes
Practice Notes - Practitioner's Notes
01-05-2020
Details
 

The audit committee is a key feature of contemporary corporate governance. Despite ever-tightening regulation concerning its independence and expertise, it still is unclear why some audit committees underperform, and how this impacts the effectiveness of the external audit. We argue that, next to having the appropriate skills, audit committee involvement in the audit process is crucial for its effectiveness. Communication, trust, and support between the audit committee and the external auditor, as well as the power and leadership of the audit committee are key features which may affect how the audit committee deals with disagreements between management and the auditor, and to what extent it will critically challenge both parties. However, these “soft” dimensions are understudied, and more insight is valuable for practitioners, academics, as well as regulators on what triggers audit committee involvement, and how this feeds back into the audit process. We aim to demonstrate that an active, involved audit committee is able to create synergies with the external auditor, which can streamline the audit process and enhance audit quality.

Authors

Prof. dr. Ann Vanstraelen

Ann Vanstraelen is Full Professor of Accounting and Assurance Services at Maastricht University and serves as Head of the department of Accounting and Information Management. She coordinates the multidisciplinary research theme "Culture, Ethics and Leadership". She earned her PhD at the University of Antwerp. Her research interests relate to the broad field of auditing and assurance services, governance, corporate reporting and disclosure, with a specific focus on the quality of accounting and auditing practices. 

 


Dr. Sanne Janssen

PhD Researcher at University of Antwerp & Maastricht University

Dr. Mathijs van Peteghem

Assistant Professor at Maastricht University & Doctoral researcher KU Leuven

Dr. Caren Schelleman
Caren Schelleman is an assistant professor at the Department of Accounting and Information Management at Maastricht University School of Business and Economics. She has also been a visiting professor at the University of Auckland, New Zealand. Caren coordinates and teaches courses on internal control and auditing at both undergraduate and graduate levels. She has presented papers at Annual Congresses of the European Accounting Association, Midyear Meetings of the Audit Section of the American Accounting Association, the International Symposium on Audit Research, conferences of the European Auditing Research Network, and at several workshops and seminars in Europe and the US. Her research interests include auditing, assurance services, internal control, and corporate governance, both from an economic and a behavioral point of view.


Dr. Ulrike Thürheimer

Ulrike joined the School of Accounting at UNSW Sydney in August 2020. Prior to that, she completed her PhD in Auditing at Maastricht University, the Netherlands. Ulrike's research centers around audit quality. She is interested in how inputs to the audit, the audit process and contextual factors affect audit production and audit quality. Specifically, her research investigates the quality of group audits, the effectiveness of public oversight and auditor's incentives from regulation and litigation. 

Prof. dr. Ganesh Krishnamoorthy

Professor Ganesh's primary areas of research interest include corporate governance, audit judgment, and internal auditing. 

He has extensive work experience in public accounting and in industry that spans several countries including India, Liberia (West Africa), and the United States.

Dr. Rogier Deumes