Auditor Professional Skepticism Research Articles

Enhancing Fraud Detection Capacities: The Role of Auditor Training, Professional Skepticism, and Integrity in Government Internal Control Mechanisms in Indonesia

Purpose: This research exploration the impact of auditor experience, training, professional skepticism, and integrity on fraud detection abilities. Method: This research uses a quantitative method to collect data and analyze the relationship between auditor experience, training, professional doubt, and integrity on the ability to detect fraud. The study population consisted of internal auditors at the Selayar Islands Regional Inspectorate Office, Jeneponto, and Takalar, South Sulawesi Province, Indonesia. From this population, n=53 was taken as a sample using a purposive sampling technique. Result and Conclusion: The findings, obtained through multiple regression analysis, reveal that while experience does not significantly affect fraud detection, training, auditor skepticism, and integrity have a notable impact. Specifically, training and the auditor's professional skepticism are crucial in enhancing fraud detection capabilities, with integrity showing a robust influence. Implication of the research: The contribution this research for government make a valuable contributions to formulating anti-corruption policies. It is important to emphasize the need for transparency and accountability in government practices, as well as focused auditor training in developing nations. Originality/value: The novelty of this research lies in examining the combined impact of auditor experience, training, professional skepticism, and integrity on fraud detection abilities within the specific context of government internal auditors in developing nations.

Cognitive dissonance and auditor professional skepticism

PurposeThis study aims to demonstrate how pressures (incentives) in the audit environment can lower audit quality because of a breakdown between professionally skeptical (PS) judgment (risk assessment) and PS action (testing).Design/methodology/approachThe authors used a Qualtrics-based experiment with attitude change as a proxy measure of cognitive dissonance (CD). The authors analyze the results using a one-way independent between-group ANOVA with post hoc tests and t-tests.FindingsThe authors find that auditors experience CD when they fail to take appropriate high PS action (audit tests) that are in line with high PS judgment (risk assessments). The motivational force to reduce CD drives auditors to revise their assessments upward (rank higher), lower diagnostic audit tests (PS actions) and lower risk assessments (PS judgments). This leads to lower overall professional skepticism, and hence lower audit quality.Originality/valueThis investigation provides an empirical investigation of Nelson’s (2009) model of professional skepticism and demonstrates a specific mechanism for how incentives in the audit environment lower audit quality. Based on the findings, treatments to enhance audit quality can benefit by strengthening the critical link between PS judgments (risk assessments) and PS actions (audit tests).

The Effect of Auditor Ethics and Auditor Professional Skepticism on Audit Quality with Remote Audit as a Moderation Variable

The increasing demand for professional public accounting services requires the public accounting profession to improve its performance to produce audits that are reliable, used, and trusted by interested parties. This study aims to identify and analyze the effect of auditor ethics and professional skepticism on audit quality with remote audit as a moderating variable. This study uses primary data obtained from questionnaire data distributed to external auditor respondents who work at a Public Accounting Firm in the South Jakarta Region. The sampling technique used purposive sampling. Multiple linear regression analysis techniques using SmartPLS 3.2.9 with a significance level of 5%. The results of this study indicate that partially, auditor ethics and auditor professional skepticism have a positive and significant effect on audit quality, while remote audit variables cannot moderate the influence between auditor ethics and auditor professional skepticism on audit quality.

The Effect Of Accountability, Integrity, Auditor Expertise, Auditor Professional Skepticism, Due Professional Care, Time Budget Pressure And Audit Fees On Audit Quality

Research Purposes Aims to determine how much influence accountability, integrity, auditor expertise, auditor professional skepticism, due professional care, time budget pressure, and audit fees have on audit quality. Research Methods All auditors who work at the Public Accounting Firm (KAP) Semarang Central Java are the population of this study. A total of 13 public accounting firms with 64 auditors became the research sample. With the help of SPSS version 26, multiple linear regression analysis was performed on the data. Research Results and Findings, The results of hypothesis testing show that integrity, auditor professional skepticism, due professional care, and time budget pressure do not affect audit quality. Meanwhile, accountability, auditor expertise, and audit fees have a positive effect on audit quality.

The effect of auditor's competence, experience, professional ethics, and auditor's professional skepticism on the auditor's ability in detecting fraud

The Internal Auditor in Higher Education is the Internal Supervision Unit which is a Lecturer with Additional Tasks appointed by the Higher Education Leader whose task is to assist the leader in supervising, evaluating, and reviewing non-academic activities. This study analyzes the influence of competence, experience of auditors, professional ethics, and professional skepticism of auditors on the ability of auditors to detect fraud (Survey of SPI Members of State Universities in Indonesia). This study used a questionnaire survey method with the number of respondents 47 people. The data is processed using smart PLS 3.0. The results of the study indicate that in the SPI PTN members, only Competence affects the Auditor's Ability to Detect Fraud, while the other variables are Auditor Experience, Professional Ethics, and Auditor Professional Skepticism have no effect.

Big Five Personality Traits dan Skeptisisme Profesional Auditor

Professional skepticism is an attitude that consistently questions and critically evaluates audit evidence. A high attitude of professional skepticism will produce a quality audit report in which the personality factor is one of the factors. Personality indicators that are declared valid are the big five personality. The aim of this study is to empirically prove the effect of the big five personality traits on the professional skepticism of auditors in the Public Accounting Firm of the Province of Bali. The research was conducted at the Bali Province Public Accountant Office by distributing questionnaires. The research sample is 55 auditors, determined by purposive sampling method. Data were analyzed using multiple linear analysis techniques. The results of the study prove that the traits of openness to experience, conscientiousness, extraversion, and agreeableness have a significant positive effect, while neuroticism has a significant negative effect on the auditor's professional skepticism.
 Keywords: Professional Skepticism; Big Five Personalit; Auditor’s Personality Traits; Public Accounting Firm

Preventing profit manipulation and improving the quality of financial reporting through the audit judgement

Purpose : The objective of this study is to assess the perception of audit professionals on the importance of adopting Accounting and Financial Reporting Standard (NRCF) 4 - Accounting Policies, Changes in Accounting Estimates and Errors and International Accounting Standard (IAS) 8 - Accounting Policies, Changes in Accounting Estimates and Errors, essentially regarding the prevention of profit manipulation practices and the improvement of the quality of financial reporting. Methodology: A qualitative methodology was adopted by conducting structured interviews with four audit professionals. Results: The interviewees consider that the auditor plays an important role in the application of value judgments and validation of estimates, stating that their work is a deterrent to the practice of profit manipulation. They also consider that the auditor's ethics, professional skepticism, and degree of independence contribute to an improvement in the quality of financial reporting and a decrease in profit manipulation practices. Research limitations: The small sample size; and the limitations associated with conducting interviews were the main limitations encountered. Originality : This study is innovative in that it gathers the opinion of auditors and chartered accountants on a very relevant matter in the accounting field, given that standards increasingly call for the application of value judgments in defining accounting policies and estimates, as well as in changing them and detecting errors. Keywords: NCRF 4; IAS 8; Auditor; Accounting Policies; Estimates. https://doi.org/10.58869/EJABM008/SI03

The Influence of The Auditor's Skepticism Attitude and Utilization of Information Technology Toward Detection Fraudelent of Financial Statement

Abstract: This study aims to provide empirical evidence about how big attitudes are Professional Skepticism of Auditors and Utilization of Information Technology affect ability auditors in detecting fraudulent financial statements. Research with this quantitative descriptive method using primary data in the form of a questionnaire as an instrument in data collection. Respondents in this study was selected using the convenience sampling method, because it has been determined by KAP. Questionnaire distributed to 60 auditors from 16 KAPs, but only 51 questionnaires were returned and 46 questionnaires were processed. Data analysis using the PLS Method. The results of the study show that there is an attitude of professional skepticism Auditors and Utilization of Information Technology in KAP Bandung City have a significant positive effect on Detection of Financial Statement Fraud, either partially or simultaneously. 
 Keywords: Auditor Professional Skepticism, Utilization of Information Technology, Fraud Detection
 Financial statements

The Effect of Red Flags and Internal Bank Auditor Professional Skepticism on Fraud Detection in Denpasar

Aims: This study was conducted to examine the effect of red flags and auditor's professional skepticism on the ability of internal auditors to detect fraud.
 Study Design: Quantitative method with survey method.
 Place and Duration of Study: Internal Auditors who work at Rural Credit Banks throughout the City of Denpasar, between October 2022 to December 2022.
 Methodology: This study uses a survey method by adopting the previous research variable measurement scale, namely red flags, professional skepticism and fraud detection. The red flags construct is measured by 4 items, professional skepticism is measured by 3 items and the fraud detection construct is measured by 3 items. A five-point Likert scale was used to measure all study constructs, where "5=strongly agree" and "1=strongly disagree". Data collection was carried out through a questionnaire survey using the saturated sampling method, with 42 respondents to the BPR Bank internal auditor research throughout Denpasar City where all respondents were able to participate well. 65% of respondents are male, and 35% are female. More than 55% of respondents have an undergraduate degree or more.
 Results: The ability of internal auditors in BPR offices throughout Denpasar City can be improved by optimizing the detection signal (red flag) and expecting the auditor to always be critical through professional skepticism towards the audit evidence presented.
 Conclusion: This study has limitations that the sample in this study is still relatively small and only limited to internal auditors who work at Rural Banks throughout the city of Denpasar, so this research suggests for further research by adding and expanding the area, number of samples and using the variable characteristics of internal auditors. Others such as personality, work experience, motivation and knowledge of the auditor as any factors that can influence fraud detection.

Pengaruh Sikap Auditor Forensik, Kemampuan dan Pengalaman Auditor Investigatif, Terhadap Efektivitas Pelaksanaan Prosedur Audit dalam Pengungkapan Fraud

This study aims to determine the effect of forensic auditor independence, forensic auditor objectivity, forensic auditor professional skepticism, investigative auditor ability and investigative auditor experience on the effectiveness of implementing audit procedures in disclosing fraud. The sample of this study was 60 auditors from the Supreme Audit Agency (BPK) and auditors from the Financial and Development Supervisory Agency (BPKP) representing the Special Region of Yogyakarta. The results of the regression analysis showed that the professional skepticism of the forensic auditor, the ability of the investigative auditor, and the experience of the investigative auditor had a significant positive effect on the effectiveness of the implementation of audit procedures in disclosing fraud. Thus, the higher the professional skepticism of the forensic auditor, the higher the ability of the investigative auditor and the better the experience of the investigative auditor, the more effective the implementation of audit procedures in disclosing fraud.

Professional skepticism as a conceptual basis of an auditor's professional judgment

The auditor's professional judgment and professional skepticism are the fundamental principles of auditing. The knowledge of their content is in the center of attention of scientists and practitioners. Recently, some trends have emerged regarding the study of their regularities with the purpose for more effective usage in practical activity. Guided by this approach, it was established that the professional skepticism and professional judgment of an auditor constitute the process of knowing the truth on the reliability, completeness and compliance with the legislation of financial reporting. The auditor's professional judgment includes an opinion in which based on proposed assumption regarding distortion of financial statements the presence of the latter is asserted or denied. Thus, the auditor's judgment is completely subordinated to professional skepticism. Such a conclusion is not accidental, but corresponds to the natural development of auditing. It is typical that at the stage of the accounting audit the auditor's judgment was aimed at confirming the accounting. Establishing fraud was situational in nature: skepticism took a secondary place. With the advent of the test audit, the auditor's professional judgment aimed to research the internal control. Showing skepticism and distrust to an economic entity had a negative assessment. The leading place in the relationship between the auditor and the economic entity was occupied by cooperation and providing useful advice. The further development of the economy and the significant growth of fraud significantly changed the social function of the audit, and thus the direction of an auditor's professional judgment. The auditor's detection of fraud became his professional duty, to which the auditor's professional judgment was fully subordinated. Based on interconnection and interdependence of professional skepticism and the auditor's professional judgment, a risk-oriented approach was formed to identify distortions of financial statements due to fraud or error.

ANALISIS PENGARUH PENGALAMAN KERJA, SKEPTISME PROFESIONAL AUDITOR DALAM MENDETEKSI KECURANGAN (STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR)

This study aims to analyze the influence of work experience, auditor's professional skepticism in detecting fraud. This research was conducted on auditors who work in manufacturing companies. Sampling used is by using purposive sampling technique, namely by distributing questionnaires in the form of google form consisting of 95 respondents. Then for the data analysis method used is descriptive statistical analysis and multiple linear regression using the Statistical Package for Social Science (SPSS) software version 26. The results of this study indicate that the auditor's work experience has no effect on the auditor's ability to detect fraud, while Professional skepticism has a positive effect on the auditor's ability to detect fraud.

The Effect of Audit Risk and Workload on Fraud Detection Through Auditor Professional Skepticism

This study examines and determines the effect of audit risk and workload on fraud detection through auditors' professional skepticism at the Papua Inspectorate. The population in this study were all 53 auditors at the Papua Inspectorate office. Sampling in this study was carried out using the census sampling method. Sources of data used are primary data collected by distributing questionnaires to all respondents. The statistical method used to test the hypothesis is to use multiple correlations with the help of SmartPLS software. Data analysis consists of descriptive statistical analysis, measurement model tests, outer models consisting of (convergent validity, discriminant validity, composite reliability) and structural model tests, or the inner model is evaluated using R-square for the dependent construct, direct and indirect hypothesis testing. The results showed that the audit risk variable had a positive and significant effect on fraud detection, the workload variable had a negative and significant impact on fraud detection, and the skepticism variable had a positive and significant effect on fraud detection. The audit risk variable positively and significantly impacts fraud detection through skepticism, and the workload variable negatively and significantly affects fraud detection through skepticism.

Audit report information improvement and earnings management

AbstractIncreasing the disclosure of key audit matters (KAMs) has been an important change in audit reports in recent years. After the implementation of this policy, what changes have taken place in the behaviour of auditors after the implementation of this policy? What impact has it had on the audit report? A series of problems deserve systematic analysis and empirical testing. This paper examines the relationship between the communication of KAMs and earnings management. We examined quasi‐natural experimental data shaped by new auditing standards issued by the Ministry of Finance of China on 23 December 2016. The new auditing standards have been implemented in phases for the listed companies. We find that (1) communicating KAMs in audit reports restrains the auditor's motivational reasoning behaviour by triggering rationality constraints and improves the auditor's professional scepticism, thus improving audit quality and significantly reducing the company's accrued earnings management level. (2) The influence of communicating KAMs on earnings management is more significant for sampled firms with high external financing dependence and low marketization, revealing its supplementary role in the existing corporate governance mechanism. The findings of this paper enrich existing research on KAMs and supplement important empirical evidence from the Chinese market for assessing the effects of audit reporting reforms worldwide.

Auditor Skill, Work Experience and Professional Skepticism on Performance of Auditors

Auditor is an accounting profession that is expected to be able to produce audit report products that can be accepted by both internal and external companies. The audit report must be existence and accuracy, completeness, rights and obligations, valuation or allocation, presentation and disclosure. To achieve this, several measuring tools are needed on how to determine the level of good auditor performance. The performance of professional auditors and having performance and broad insight will produce report products that can be accounted for and have reliable financial report functions and information. The research method used in this research is to use literature review, a systematic, explicit and reproducible method to identify, evaluate and synthesize research works and ideas that have been produced by researchers and practitioners. The results of this study can be concluded that good governance, audit structure, role conflict, role ambiguity, understanding of good governance, task complexity, have no effect on auditor performance. While organizational commitment, leadership style, professional training, competence, Locus of Control, and Auditor Integrity affect the performance of the auditor. For professional skepticism and audit knowledge, it turns out to have a positive and significant influence on the indications of regional loss findings.

MENINJAU SKEPTISISME PROFESIONAL AUDITOR, INDEPENDENSI DAN RED FLAGS TERHADAP KEMAMPUAN AUDITOR DALAM MENDETEKSI KECURANGAN (STUDI KASUS INSPEKTORAT KABUPATEN PONOROGO DAN MADIUN)

This study aims to analyze the Professional Auditor's Skeptic Independence, and Red Flags on the Auditor's Ability to Detect Fraud. The sample a in this study are auditors who worked at the Inspectorate of Ponorogo and Madiun Regencies conssist of 31 auditors.This research uses purposive sampling method by distributing questionnaires with a Likert scale and which has met the validity and reliability requirements. Data analysis and hypothesis testing using multiple linear regression. The results of multiple linear analysis indicate that the variable auditor professional skepticism has a significant effect on the ability of auditors to handle fraud. Meanwhile, the red flag variable does not have a significant effect on the ability of auditors to detect fraud. Consequently, this study’s implication is Auditor must always uphold the attitude of professional skepticism and independence in every audit action andpProcedures because auditors who have this attitude will affect the auditor's ability to detect fraud.

Behavioral challenges to professional skepticism in auditors’ data analytics journey

The aims of this paper are to inform audit practice and academia about the potential behavioral challenges to the application of auditors’ professional skepticism when using audit data analytics (ADA) and to discuss future research opportunities. This is accomplished by reviewing relevant audit research and discussing the potential challenges from five perspectives, including auditors’ attitudes toward ADA, data characteristics, anomalies identified by ADA, auditors’ mindsets, and social contexts and interactions involved in ADA practice. Although applying ADA brings many benefits to audit practice, they simultaneously raise many challenges to the application of appropriate levels of auditor professional skepticism. Being aware of and prepared for those potential behavioral challenges is critical to maximize the benefits of ADA to professional skepticism and ultimately audit quality.

The concept of the auditor's professional skepticism and its genesis

The paper considers such a fundamental principle of audit as the auditor's professional skepticism. Guided by an integrated approach, the conceptual foundations of professional skepticism, patterns of its origin, its formation and development are determined depending on the understanding of the public function of audit and the auditor's duty to detect the fraud at the appropriate historical stage. It is noted that the concept of skepticism has a deep history and is considered in philosophy, psychology, law and other sciences. It is concluded that in the aspect of audit the methodological skepticism deserves attention, which is not limited to doubt, but is aimed at making sound hypotheses. Their construction and verification are subject to the general laws of gnoseology, which directly apply to the auditor's cognitive activity. Based on this approach, it is proposed to consider a hypothetical judgment in audit activity to identify and assess the risks of fraud from the standpoint of professional skepticism as making and verifying assumptions in the form of a version. Thus, the professional judgment of the auditor, which takes the form of professional skepticism, is necessarily based on the conclusions of the opposite or contradictory judgment. The paper also presents a critical assessment of the Law of Ukraine "On Auditing Financial Statements and Auditing" to determine the content of professional skepticism. The ways to improve national legislation and its conformation with the requirements of International Standards on Audit are proposed.

The Influence of Auditor Ethics, Auditor Motivation, Locus of Control on Audit Quality: Role of Professional Skepticism

Good audit quality is needed so that financial statements can be useful for the community as a basis for making decisions. Corruption Eradication Commission (KPK) named Supreme Audit Agency (BPK) members as suspects in the drinking water bribery case because an abnormal value was found in the financial statements and in 2017 the BPK auditor was caught in the practice of purchase and sale opinions on the financial statements of the Ministry of Villages. This can be indicated by the existence of fraud in the audit results which makes the quality of the audit doubtful. This study aims to examine the effect of auditor ethics, auditor motivation, locus of control on audit quality with auditor professional skepticism as an intervening variable. The sample used in this study amounted to 59 samples sourced from auditors Auditorat of State Finances (AKN) V and VI BPK RI with a questionnaire instrument. The analytical technique employed in this study was Structural Equation Modeling (SEM), which was performed with the SmartPLS version 3.0 tool. The findings of this study show that auditor ethics, motivation, and locus of control all have an impact on audit quality, while auditor professional skepticism does not. Furthermore, the relationship between auditor ethics and audit quality cannot be moderated by auditors' professional skepticism.

Opportunistic Avoidance of Litigation Loss Accruals and the Mitigating Effects of Auditors

We find that firms with preliminary earnings that are expected to just meet analyst forecasts are more likely to only disclose (i.e., not accrue) litigation loss contingencies, claiming that the litigation event falls below the qualitative thresholds necessitating accrual. We also find that this opportunistic treatment of a subjective estimate is reduced when firms’ auditors have expertise in the defendant’s industry or have experience auditing litigation contingencies. Furthermore, we find that opportunistic disclosure usage increases when firms are more economically important to auditors’ client portfolios. Our results are robust to a series of additional tests. We provide evidence to support the Public Company Accounting Oversight Board’s (PCAOB) call for increased auditor professional skepticism toward management bias and opportunism when evaluating subjective estimates.