Imitation of senior auditors might be a valuable strategy for juniors to learn on-the-job and improve their performance. In this paper, the research team experimentally examines how a senior auditor’s working style (high diligence vs. low diligence) interacts with the nature of the audit firm’s promotion system (superior-based vs. consensus-based) to influence junior auditor judgment by affecting junior auditors’ imitation behavior.

Authors

Prof. dr. Eddy Cardinaels

Eddy Cardinaels (1975) is full Professor of accounting at Tilburg University and part-time professor at KU Leuven. His work combines new insights from psychology and behavioral economics to study how different information presentation (ABC, BSC, summaries of earnings releases) can affect decision making of managers within companies. Other experimental work focuses on drivers of honest reporting and social motives in inter-firm negotiations. He also conducts archival work on corporate governance examining how social connections between board members affect financial reporting, how companies use their networks to engage in tax avoidance and factors that drive (excess) compensation. 

Prof. dr. Kristof Stouthuysen

Professor in Accounting and Control at Vlerick Business School and KU Leuven.

Dr. Evelien Reusen

Evelien Reusen obtained her PhD at KU Leuven and is currently Associate Professor in Management Accounting at RSM. 

Evelien’s research concentrates on the role of control, cooperation and trust, in both intra- and interorganizational settings.

Her work has been published in Accounting, Organizations, and Society and The Journal of Supply Chain Management.

Viola Darmawan PhD student

Denken als een adviseur helpt accountant bij frauderisico’s: staan de beste stuurlui toch aan wal?

Beslissen is iets anders dan adviseren. Beslissen gebeurt vaak op instrumentele wijze. Bij het geven van advies wordt meer nagedacht en overwogen. Accountants handelen vaak instrumenteel: ze volgen controleprogramma’s, wensen van toezichthouders en aanwijzingen van leidinggevenden. Dat kan leiden tot inefficiënte en/of ineffectieve controles. Frauderisico’s worden bijvoorbeeld wel gezien, de accountant weet in principe ook best welk extra bewijs moet worden verzameld, maar toch vinden vervolgens onvoldoende aanpassingen plaats in de controlewerkzaamheden. De gedachte achter deze studie is dat accountants met een ‘adviesbril’ beter in staat zijn om dergelijke aanpassingen voor te stellen, omdat ze in de adviesrol een andere mindset activeren dan in de beslisrol.

Authors

Dr. Luc Quadackers

The paper on this subject presents an open-source algorithm to extract data from (draft) annual reports (PDF files) using Python to automate, rather than outsource, the data extraction for reconciliations. 

It was a joint project with Jeroen Bellinga, Seyit Hocuk, Wim Janssen and Alaa Khzam. Wim Janssen and Alaa Khzam developed the programming code.

Authors

Jeroen Bellinga

WP Tjibbe Bosman RA MSc

It is essential that auditors continuously learn. The need for continuous learning is fostered by the changing expectations from society and stakeholders, rapid technological developments, and the increasing complexity of information systems. Auditing regulators and oversight bodies are concerned that certain aspects of the auditing profession may form barriers to effective learning. To gain a better insight in how auditors can effectively learn, it is important to identify and distinguish the different learning processes in the auditing profession. Based on our recent literature review we differentiate between seven learning processes. In this FAR Practice Note, we highlight the most important insights from the academic literature for each learning process. Based on this, stakeholders can develop tools to facilitate auditor learning processes in practice.

Authors

Christian Peters PhD student

Prof. dr. Bart Dierynck

Prof. dr. Kathryn Kadous

Kathryn Kadous is the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the Ph.D. Program at Emory University's Goizueta Business School. She earned a PhD from the University of Illinois. Prior to that, she worked as an auditor and controller. Professor Kadous' research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor decision making and on identifying the antecedents of auditor skepticism. Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory. 

Professor Kadous has served two terms as an editor for The Accounting Review and two terms as an editor for Auditing: A Journal of Practice & Theory. She serves on several editorial boards and has served on various research and publications related committees and tasks forces for the American Accounting Association (AAA) and the Auditing and Accounting, Behavior, and Organizations Sections of the AAA. She is currently Vice-President (Academic) of the Auditing Section of the American Accounting Association.

Rapid changes in capital markets, expanded assurance models, and technological developments have increased the need for auditors to learn in the workplace. Drawing on literature in auditing and workplace learning, this paper develops the Auditor Learning Framework. Based on a general workplace learning framework by Jacobs and Park (2009), the Auditor Learning Framework distinguishes auditor learning processes along three dimensions: the location of learning, the extent of planning involved in the learning process, and the role of the supervisor. We review the auditing literature, classifying papers that directly or indirectly improve our knowledge of auditor learning into our framework to identify gaps in our understanding of the auditor learning processes. Our study provides a comprehensive view of auditor learning processes and provides suggestions for future research aimed at improving auditor learning.

Please click the link to the SSRN publication below.

Authors

Christian Peters PhD student

Het is essentieel dat accountants voortdurend leren. De noodzaak om continu te blijven leren neemt verder toe door de veranderende verwachtingen van maatschappij en stakeholders, snelle technologische evoluties en de toenemende complexiteit van informatiesystemen. Externe toezichthouders spreken echter de zorg uit dat bepaalde factoren het leren van accountants in de weg staan. Om een beter inzicht te krijgen in hoe accountants leren is het belangrijk om de verschillende leerprocessen in het accountantsberoep te onderscheiden. Op basis van recent literatuuronderzoek onderscheiden wij zeven leerprocessen. In deze FAR Practice Note lichten wij per leerproces de belangrijkste bevindingen uit de wetenschappelijke literatuur toe. Op basis hiervan kunnen praktische handvatten worden ontwikkeld om deze leerprocessen te verbeteren.

Authors

Christian Peters PhD student

Prof. dr. Bart Dierynck

Prof. dr. Kathryn Kadous

Kathryn Kadous is the Schaefer Chaired Professor of Accounting and the Director and Associate Dean of the Ph.D. Program at Emory University's Goizueta Business School. She earned a PhD from the University of Illinois. Prior to that, she worked as an auditor and controller. Professor Kadous' research considers judgment and decision-making issues in auditing and accounting. Her current research is focused primarily on using psychology theory to improve auditor decision making and on identifying the antecedents of auditor skepticism. Professor Kadous' research has been published in The Accounting Review, Contemporary Accounting Research, Journal of Accounting Research, Organizational Behavior and Human Decision Processes, The Journal of Behavioral Finance, and Auditing: A Journal of Practice and Theory. 

Professor Kadous has served two terms as an editor for The Accounting Review and two terms as an editor for Auditing: A Journal of Practice & Theory. She serves on several editorial boards and has served on various research and publications related committees and tasks forces for the American Accounting Association (AAA) and the Auditing and Accounting, Behavior, and Organizations Sections of the AAA. She is currently Vice-President (Academic) of the Auditing Section of the American Accounting Association.

Accountantsorganisaties zijn druk bezig om de determinanten van controlekwaliteit te doorgronden en op basis daarvan hun beleid aan te scherpen. Veel aandacht gaat daarbij uit naar het creëren van een kwaliteitsgeoriënteerde cultuur en het faciliteren van adequaat leergedrag. Recent onderzoek van Maastricht University verschaft hiervoor belangrijke inzichten. Uit de resultaten blijkt onder andere dat toon aan de top, infrastructuur, bedrijfscultuur en job resources het leergedrag in belangrijke mate beïnvloeden. Bijvoorbeeld: de mate waarin ruimte bestaat om verschillen van mening naar elkaar uit te spreken heeft invloed op de kwaliteit van het geleverde werk.

Authors

Dr. Luc Quadackers

This paper includes several recommendations and lessons learned from the data gathering efforts of the FAR to inform on the availability of audit quality data and measurement of potential AQIs in practice. This paper is also of interest to those audit practitioners managing and designing the quality control (monitoring) systems of audit firms, those involved in preparing the transparency reports, and policymakers and regulators in their considerations of AQI’s

Authors

WP Tjibbe Bosman RA MSc

Several committees, institutions, and practitioners are currently working on defining appropriate, and reliable Audit Quality Indicators (AQIs). This project deliberates on a wide range of audit quality measures applied in international academic auditing research. 

Authors

WP Tjibbe Bosman RA MSc

This paper synthesizes research on audit firm culture (AFC) over the past decade, reviewing recent developments in research on factors instilling culture in audit firms, and how culture influences audit quality and auditors’ work attitudes. We develop and apply a three-phase model based on prior research and  professional  guidance  (IAASB,  2014),  which  maps  cultural  embedding  mechanisms  (EMs,  visible manifestations and organizational conditions to establish culture), perceptions of existing culture, and consequences of culture. Our synthesis shows that the culture of an audit firm is most oriented toward quality if leadership emphasizes professionalism over commercialism, promotes ethical judgments, and facilitates learning  through  systems,  integration  of  specialists,  and  interpersonal  interactions  among  auditors.  The research cited shows strong influence on AFC of tone at the top set by leadership, as well as incentives in performance/reward systems. Studies we review generally imply continued concern for the influence of commercialism on AFC, but future research should investigate whether recent forces (i.e. pressure from regulators and efforts by the firms) have caused a cultural shift toward professionalism. We close by suggesting opportunities for future research that can strengthen understanding how AFC can be better managed by firms.

Authors

Cristina Tomas Alberti PhD CPA

Prof. Jean C. Bedard

Prof. dr. Olof Bik RA

Olof Bik is professor Behavioral Research in Auditing at Nyenrode Business University. He is also a member of the daily board of the Foundation for Auditing Research (FAR). Bik worked in accounting practice for 18 years, since 2002 always in combination with a university appointment. He obtained his PhD at the University of Groningen with a dissertation on the effects of culture on accountant behavior.

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. 

 

Een manager die fraudeert in de jaarrekening zal proberen zijn bedrog te verbergen. Als de accountant de bijbehorende afwijking ontdekt, wat zegt de manager dan om niet als fraudeur te worden bestempeld? Het meest waarschijnlijke scenario is dat de manager de afwijking zal presenteren als een onbewust gemaakte fout. En het is niet onwaarschijnlijk dat de accountant vervolgens akkoord gaat met deze verklaring, met alle gevolgen van dien. Oppassen dus.

Maar hoe krijgt een manager de accountant zover? Het antwoord ligt zo voor de hand, dat dit lange tijd is onderschat: de manager laat het liefst acties achterwege. 

De fout-verklaring van een manager is plausibeler als een transactie helemaal niet is geboekt (een omissie), ten opzichte van het verkeerd boeken van een transactie (een actie). De accountant zal een omissie dus eerder als een onopzettelijke fout zien dan als fraude.

‘Maar fouten komen toch veel vaker voor dan daadwerkelijke fraude?’, zal menigeen beweren. ‘Dat is toch een bekend statistisch gegeven?’ 

Recent onderzoek van Erin Hamilton en Jason Smith stelt juist deze aanname ter discussie. Zij onderzoeken of omissies van transacties een fraudemethode vormen die succesvol onder de radar van de accountant is gebleven.

Authors

Dr. Luc Quadackers

A manager who cheats on financial statements will try to hide his fraud. If the auditor discovers the associated misstatement, what does the manager say to avoid being labeled a fraudster? The most likely scenario is that the manager will present the deviation as a mistake that was made inadvertently. And it is not unlikely that the auditor will subsequently agree with this statement, with all its consequences. So be careful.

But how does a manager get the auditor to do so? The answer is so obvious that it has been underestimated for a long time: the manager prefers to omit rather than to make up a number.

A manager's error statement is more plausible if a transaction was ignored (an omission), compared to the incorrect entry of a transaction (an action). The auditor is, therefore, more likely to see an omission as an unintentional error than as a fraud.

But, statistics would support the idea that mistakes are much more common than actual fraud. Are these statistics wrong?

Recent research by Erin Hamilton and Jason Smith calls into question this very question. They investigate whether omissions of transactions are a fraud method that has successfully stayed under the (auditor's) radar.

Authors

Dr. Luc Quadackers