Prof. Dr. Anna Gold

Prof. dr. Anna Gold

Director of the Foundation for Auditing Research and Professor of Auditing

Anna Gold is Professor of Auditing at Vrije Universiteit Amsterdam. Since 1 September she is also the Academic Director of the Foundation for Auditing Research. She is internationally recognized for her research on audit judgment and decision-making. With her strong academic background and practical focus, she plays a key role in connecting research with audit practice. In her role at FAR, she leads efforts to promote impactful and independent audit research.

3rd FAR International Conference Proceedings

KEY TAKE-AWAYS

Audit firm culture is viewed by regulators and inspectors as the means to enhance audit quality. This study uses the Competing Values Framework (CVF) to explore the culture of
large audit firms, and their attempts to change their cultures. We find that these firms predominantly emphasize a culture characterized by collaboration and control, which is consistent with an inward focus. We also find that audit firms struggle to implement a consistent understanding of culture across their offices and function levels, and there is a gap in how partners perceive culture compared to that of non-partner staff. This “culture gap” has negative consequences on auditors, as larger culture gaps are associated with lower psychological safety and poorer person organization fit. Embedding mechanisms can lower the culture gap, but having adequate resources is far more important of an embedding mechanism than “tone at the top.” The findings underscore the importance of actively communicating and reinforcing stated cultural values, and provide audit firms with a practical tool to diagnose problems in achieving culture change.

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The Effects of Expert Status on the Audit of Complex Estimates
This practice note explores whether auditors confuse a specialist’s status with actual work quality when auditing complex estimates. Professional standards require auditors to assess specialists based on experience and reputation, but the study finds that auditors often attribute high status to irrelevant factors such as social connections, confidence, and any certification, regardless of relevance. This can lead to overreliance on specialists and increased audit risk.
Preliminary survey results show that status strongly influences auditors’ perceptions, even when substantive evidence is weak. The authors recommend focusing on evaluating the specialist’s work rather than background, and suggest centralizing specialist assignments within firms to reduce bias.
Future experiments aim to test how status interacts with justification strength and client alignment in shaping auditor judgments.
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The Effects of Expert Status on the Audit of Complex Estimates
The study explores how expert status influences auditors’ evaluation of specialists involved in auditing complex estimates. Auditors often rely on specialists due to the technical nature of such estimates, but they struggle to assess the quality of specialist input. The research suggests that high-status specialists—those with prestigious affiliations or reputations—may receive more favorable evaluations, even when their work lacks strong justification. This can lead to audit risk if auditors substitute status for substance. Three key findings emerge:
  1. Auditors rate high-status specialists more positively, regardless of actual work quality.
  2. When specialists agree with clients, auditors are less critical if the specialist has high status.
  3. When specialists disagree with clients, high status lends credibility to the dissent, improving audit quality.
The study warns against overreliance on status cues and calls for more balanced evaluations based on the substance of expert input.   Literature Review
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FAR Masterclass Report: Masterclass on Judgment Biases in Auditing
Although auditors are well-educated professionals, they are also human beings. This means that they are susceptible to judgment biases. Departing from psychological theories, four judgment biases were discussed during Anna Gold’s well-attended masterclass:
  • Availability bias: the tendency to consider information that is easily retrievable from memory as being more likely, more relevant, and more important for a judgment.
  • Anchoring bias: the tendency to insufficiently adjust away from an initial anchor.
  • Overconfidence bias: the tendency to be overconfident in our judgment abilities.
  • Confirmation bias: the tendency to seek and overweight confirming evidence.
It cannot be stressed enough: awareness of the existence of these judgment biases is an important first step in reducing their negative effects.
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Sent from Mobile: The Influence of Communication Devices and Psychological Distance on Professional Skepticism-Enhancing Advice
Audit firms are increasingly adopting mobile communication devices, but their impact on the advice given by supervisors remains unclear. This study examines whether and how the choice of communication device (mobile phone vs. PC) and the psychological distance supervisors feel from the task, affect the advice they give to their subordinates, particularly in terms of enhancing professional skepticism. Using an experiment, we find that mobile phones make skepticism-enhancing advice less persuasive compared to PCs, particularly when supervisors are closely involved in the task. However, when supervisors are more distanced from the task, mobile phones do not significantly reduce the quality of advice and may even enhance certain aspects of professional skepticism. These findings highlight the importance of understanding the behavioral effects of communication tools and being purposeful when making communication choices.
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A Synthesis of Research on Auditor Reporting on Going-Concern Uncertainty: An Update and Extension
Reporting on going-concern-related uncertainties remains one of the most challenging issues faced by external auditors. Even though professional standards do not hold external auditors responsible for predicting future events, such as the subsequent viability of audit clients, if an auditor refrains from issuing a going concern modified audit opinion (hereafter GCO) and the client company subsequently fails (referred to in the academic literature as a “type II” reporting error), the costs to the auditor in terms of increased litigation costs and loss of reputation are often substantial (Carcello and Palmrose 1994). At the same time, companies usually do not welcome a GCO from their auditor. For example, if an auditor renders a GCO to a financially distressed client, there is often concern that the GCO itself may precipitate, or at least accelerate, the financial distress of the already troubled company resulting in a self-fulfilling prophecy. Further, if an auditor renders a GCO to a client that subsequently survives (referred to in the academic literature as a “type I” reporting error), these clients are significantly more likely to switch to another auditor for their next audit (Geiger, Raghunandan and Rama 1998). It is not surprising, then, that audit practitioners, regulators and standard-setters around the world continue to grapple with this complex issue. As requested by the Foundation for Audit Research (FAR), the primary purpose of this research synthesis is to review and discuss the recent academic literature pertinent to the auditor’s decision to issue, or not issue, a GCO. Our review begins with research available after the going-concern research synthesis provided in Carson, Fargher, Geiger, Lennox, Raghunandan and Willekens (2013). We attempt to minimize the gap and the overlap in the research discussed in Carson et al. (2013) and our work. Further, in an attempt to be as comprehensive as possible, we do not limit our coverage to only published research, but also include well-developed working papers in the public domain, particularly if we determine they add significant contribution to the literature.
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FAR Masterclass Report on Going Concern Opinions (GCO’s) in Theory and Practice
Marshall Geiger, Anna Gold and Philip Wallage presented a masterclass on Going Concern Opinions (GCOs). In this report, a summary of the masterclass is presented. The main purpose of the session was to communicate the main results of their literature synthesis and to extend and corroborate the findings of the focus group meeting that was part of the research project, by means of an in-depth discussion concerning eight broad GCO topics.  
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Can audit committee support improve auditors’ application of professional skepticism?
Despite the recognized importance of professional skepticism, auditors’ failure to consistently exercise a sufficient level of professional skepticism continues to be a globally recognized issue. In this study, we seek to gain a better understanding of the role audit committees, who oversee the audit process and can help/aid in improving auditors’ application of skepticism. In a survey of audit practitioners, we found that: audit committee support varies substantially between audit engagements; audit committee support is multifaceted; and the support is often not conveyed to the lower-level members of the engagement team. Given our survey findings, we experimentally investigated whether and how audit committee support being explicitly conveyed to the entire engagement team (by either the partner or audit committee chair) impacts the skeptical judgments and actions of auditors. We find that an expression of audit committee support conveyed explicitly by the audit partner can increase the skeptical actions of auditors, whereas such an expression of support by the audit committee chair does not. Our findings point to the crucial role audit partners can play in improving auditors’ application of professional skepticism.  
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Engaging auditors’ innovation mindset to mitigate goal conflict and improve audit effectiveness with data analytics – thinking outside of the box
The paper explores how engaging auditors’ innovation mindset can improve audit effectiveness when using data analytics, particularly in fraud detection. It addresses two key challenges:
  1. Goal conflict: auditors are increasingly expected to provide client insights alongside ensuring audit quality, which can reduce performance on primary audit tasks.
  2. Cognitive flexibility: essential for interpreting complex data analytics outputs and maintaining professional skepticism.
The authors propose that priming an innovation mindset enhances cognitive flexibility, enabling auditors to manage competing goals and improve judgment quality. They design an experimental study to test whether creativity prompts mitigate negative effects of goal conflict and lead to better fraud risk assessments and audit procedures. Key contributions:
  • Highlights risks of conflicting goals in audits using data analytics.
  • Suggests creativity interventions to strengthen auditors’ professional skepticism.
  • Provides insights for regulators and firms on fostering innovation to improve audit quality.
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How do audit committees support audit engagement teams and encourage professional skepticism? A survey and experimental evidence
KEY TAKE-AWAYS The team explores how audit committees (ACs) support audit engagement teams and whether AC support can improve auditors’ professional skepticism. First they surveyed audit practitioners and found out that AC support is multidimensional, varies between engagements, and often is not communicated to the entire engagement team. Then it was experimentally investigated whether the explicit communication of AC support to the entire engagement team (by the partner vs. the AC chair) impacts the skepticism of auditors. While skeptical judgments are consistently high, auditors vary in their skeptical actions. When management attitudes towards the engagement team are poor, AC support communicated by the audit partner increases skeptical actions. Direct communication of support by the AC chair does not increase skepticism relative to when the partner conveys AC support. The findings of the team highlight the importance of AC support for audit teams, and the lack of AC support (or communication thereof) that exists on many audit engagements.  
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Involvement in the Development of Data Analytics and Auditors’ Application of Professional Skepticism
Audit firms around the globe have invested heavily in a variety of audit technologies. Of these technological developments, audit data analytics (ADA) are receiving increased attention because they enable auditors to incorporate more diverse data and visualizations into their testing (i.e., graphical representations such as charts, scatter diagrams, trend lines, or maps). The American Institute of Certified Public Accountants (AICPA) defines ADA as “the science and art of discovering and analyzing patterns, identifying anomalies, and extracting other useful information in data underlying or related to the subject matter of an audit through analysis, modeling, and visualization for the purpose of planning or performing the audit”. The current study focuses on ADA visualizations, which can aid auditors when scrutinizing audit evidence and ultimately improve audit quality.
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Thinking Outside the Box: Engaging Auditors’ Innovation Mindset to Improve Auditors’ Fraud Judgments and Actions in a Data-Analytic Environment
Data analytics has become a prominent tool for audit firms, which exalt its capabilities to promote audit quality. However, whether auditors have the appropriate mindset to fully leverage the capabilities of data analytics is yet unclear. Further, as data analytics becomes more prevalent in audit engagements, auditors are encouraged to also use this technology to provide client insights. This use has sparked concern from regulators that this additional goal could negatively impact audit quality by shifting an auditors’ focus and/or impacting independence. This could happen as these goals may compete for the same cognitive resources and auditors face time constraints. In addition, the focus on providing insights could be viewed as an auditor operating in more of an advisory (non-audit) role. In this study, we seek to understand whether encouraging auditors to be creative by employing an innovation mindset and instructing them to identify clients’ insights, when using data analytics, has a meaningful positive? impact on audit quality. We examine this using an experiment in which audit quality means the ability to address seeded fraud in a hypothetical engagement. Our results indicate that encouraging auditors to be creative increases their cognitive flexibility, which results in better identification of effective audit procedures (i.e., procedures targeting fraud). In addition, when a creative prompt is paired with a new goal to provide client insights, auditor judgments improve even more. Finally, encouraging auditor creativity also appears to improve their identification of value-added client insights. We recommend that firms look at creativity as a tool to improve auditor judgments. We point out for those concerned about adding a goal to provide client insights that this goal may not have a negative impact and in some instances may even improve audit quality.  
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November 12, 2023

FAR research team wins EARNet Best Paper Award!

During the Earnet Symposium, held in Thessaloniki, Sara Bibler, CPA, Tina Carpenter, Margaret Christ and Anna Gold won the Best Paper Award with their paper ‘Thinking Outside of the Box: Engaging Auditors’ Innovation Mindset to Improve Auditors’ Fraud Actions in a Data-Analytic Environment’. Congratulations on this gr…

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