Professional Skepticism Research Articles

Clarifying the decision-making mystery: drivers of professional skepticism, ego depletion and overconfidence in independent auditors’ quality of judgment

PurposeThis study aims to investigate the influence of professional skepticism (PS) on the quality of judgment and decision-making (QJDM) among Iranian Certified Public Accountants (CPAs) while considering the moderating effects of ego depletion (ED) and overconfidence (OC).Design/methodology/approachNonprobabilistic sampling was used to collect data through questionnaires and direct engagement with 950 Iranian CPA members, resulting in 300 completed responses for analysis.FindingsThe study confirms that PS significantly positively impacts QJDM among independent auditors. Therefore, a high level of trait PS could improve QJDM. In addition, a majority of auditors experience ED and suffer from OC bias due to their extensive knowledge, experience and self-efficacy. ED and OC play negative moderating roles in attenuating the effect of PS on QJDM.Research limitations/implicationsThe study emphasizes that integrating PS into auditors’ codes of ethics and improving audit work systems can significantly enhance the quality of auditing practices. Furthermore, addressing existence of OC and ED among auditors will further benefit the audit process. Implementing these measures will lead to more accurate assignment and distribution of audit work among independent auditors, ultimately resulting in more reliable and objective auditing judgment and making decisions.Originality/valueThis study not only approves the vital role of PS, ED and OC in the QJDM of independent auditors but also contributes to the existing QJDM literature in auditing.

The Influence of Communication Medium on Professional Skepticism in Auditor-Client Interactions

SYNOPSIS Auditors frequently interact with clients to perform inquiries and must maintain an appropriate level of professional skepticism during these interactions. Inquiries can be performed using various communication mediums. Although prior research has shown that partners prefer traditional face-to-face (FTF) interactions, many younger auditors prefer computer-mediated communication (CMC) (Bennett and Hatfield 2018). The present study examines the effect of four levels of communication media (email, chat, video, and FTF) on auditor skeptical behavior. Results suggest that auditors are more skeptical when interacting with the client by email than by chat, video, and FTF. These findings inform practitioners of what types of auditor-client interactions may negatively impact auditor skeptical behavior. Data Availability: Please contact the author.

Factors Influencing the Professional Skepticism of Independent Auditors in Financial Statement Audits

The author employed a qualitative research method by soliciting the opinions of experts in the field of auditing. From this, the author identified five primary factors influencing professional skepticism, which include: the auditors' professional knowledge and experience, the auditors' ethical standards, the auditors' personality, the relationships between auditors and their superiors, colleagues, and clients, as well as the workload. Through quantitative research methods, the author determined that three factors – auditors' professional knowledge and experience, auditors' ethical standards, and auditors' personality – positively affect the professional skepticism of independent auditors in financial statement audits.

Fraud Detection: Professional Skepticism and Quality Control System

AbstractFraud is defined as an intentional violation of the law which causes harm to others. This study aims to determine the influence of Professional Skepticism and Quality Control Systems on Fraud Detection. The method used is descriptive and verificative analysis with a quantitative approach to 40 auditors in 13 Bandung City Public Accounting Firms. Primary data was collected through survey method data collection techniques through questionnaires. The data analysis method uses multiple linear regression analysis, which tests using SPSS 23.0 software for Windows. The results of this study show that Professional Skepticism and Quality Control Systems affect Fraud Detection. This research contributes as an evaluative tool for auditors to increase professional skepticism by implementing a quality control system in their assignments. The novelty of thisresearch is that auditors require professional scepticism and good quality control systems to detect fraud quickly and accurately. Keywords:Professional Skepticism, Quality Control System, Fraud Detection

Auditor Skill Demands and Audit Quality: Evidence from Job Postings

This study empirically examines the relation between audit quality and auditors’ cognitive and social skills. Using a novel data set of online job postings by accounting firms, we document substantial variation in the stated demand for auditors’ cognitive and social skills, suggesting that audit offices are not homogeneous in their preferences for such skills. We find a positive relation between audit quality and the prevalence of cognitive and social skills within an audit office’s job postings. This association is stronger for audit engagements that are more complex or require greater coordination, suggesting that cognitive and social skills are particularly important in engagements where effective communication and knowledge transfer, as well as sound professional judgment and skepticism, are needed. The association is also stronger for audit offices with greater investments in new technology, consistent with the complementary relation between cognitive and social skills and the use of technology. Overall, our study offers empirical evidence linking specific auditor skills to audit quality. This paper was accepted by Suraj Srinivasan, accounting. Funding: C. Ham acknowledges financial support from the Blanche “Peg” Philpott Faculty Fellowship. R. N. Hann acknowledges financial support from KPMG. W. Wang acknowledges the financial support from the Hong Kong Research Grant Council [Grant 11503720]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01640 .

Professional Judgment and Skepticism Amidst the Interaction of Artificial Intelligence and Human Intelligence

Professional Judgment and Skepticism Amidst the Interaction of Artificial Intelligence and Human Intelligence

The Impact of Client Bankruptcies on Auditors’ Judgment and Future Audit Engagements

We examine whether and how engagements with bankrupt clients (i.e., bankruptcy experiences) affect auditors’ behavior in future engagements. Using a large sample of Swedish auditors-in-charge (AICs), we find that AICs’ bankruptcy experiences are positively related to the issuance of going-concern opinions to financially distressed clients, audit fees, and clients’ earnings quality. Our evidence implies that such experiences increase AICs’ conservatism and professional skepticism and contribute to higher audit quality. We also show that AICs’ bankruptcy experiences are associated with more conservative client management strategies – the lower (higher) likelihood of accepting (resigning from) financially distressed clients. Furthermore, we find that the impact of bankruptcy experiences on AICs’ decision-making is stronger when those experiences are more salient and recent, as well as when they are followed by a sanction. Overall, our findings indicate that AICs who have experienced client bankruptcies deliver higher audit quality and exhibit a greater level of conservatism in client selection, providing novel evidence on how individual auditors’ auditing styles are shaped by their professional experiences.

"The Effect of the determinants of Auditor's expertise and external factors on the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

"The Effect of the determinants of Auditor's expertise and external factors on the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

"The Integration between the theory of social styles and characteristics of "Hurtt's model" in explaining the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

"The Integration between the theory of social styles and characteristics of "Hurtt's model" in explaining the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

“It Doesn’t Make Sense”: Professional Skepticism As Sensemaking

SUMMARY Professional skepticism is a fundamental yet complex aspect of auditing. To understand how auditors exercise skepticism in practice, Xu, Yang, and Fukofuka (2023) conducted qualitative research based on stories provided by auditors. The study identified that professional skepticism is like a sensemaking process. It is triggered and unfolded through auditors’ actions and interactions with their audit teams and clients. These findings highlight the importance of understanding how auditors act, converse, and interact with clients to effectively exercise professional skepticism, which has important implications for auditing firms and practitioners.

Professional skepticism and auditors’ judgments: Evidence from Tunisia

Professional skepticism and auditors’ judgments: Evidence from Tunisia

Auditor Independence and Experience in Fraud Detection: the Crucial Role of Professional Skepticism

This study aims to examine the effect of auditor independence and experience on fraud detection, with professional skepticism as a moderating variable. In today's business world, many companies strive to achieve maximum profits. In pursuit of this goal, some companies engage in fraudulent practices, which have become common among businesspeople and are well-known to the general public. These fraudulent practices occur not only in the private sector but are also frequently found in the government sector, harming many parties due to inaccurate and irrelevant information. Investors are the most affected, as they often make incorrect investment decisions based on misleading information. Agency theory suggests that more independent auditors tend to be more effective in detecting fraud because they are more likely to act in the interest of the capital owners than less independent auditors. This study involves 108 auditors from 19 audit firms in Bali. The structural equation modeling analysis method was employed to measure the strength of the relationship between the dependent and independent variables using Smart PLS. The results show that auditor independence and experience have a positive impact on fraud detection, and professional skepticism strengthens the effect of independence and auditor experience on fraud detection.

PENGARUH KODE ETIK, PENGALAMAN KERJA DAN SITUASI AUDIT TERHADAP SKEPTISISME PROFESIONAL AUDITOR

This research aims to determine the influence of the Code of Ethics, Work Experience, and Audit Situation on the Skepticism of Professional Auditors at Public Accounting Firms in Tangerang. The population in this study were all auditors who worked at the Public Accounting Firm (KAP) in Tangerang with a sample size of 33 respondents. The sampling method used was the convenience sampling method. The data source used is primary data and the data collection method used is through a questionnaire distributed to auditors working in KAP in the Tangerang area. The analysis technique used is multiple linear regression analysis. Hypothesis testing uses the coefficient of determination test, F test, and T test. Data analysis uses SPSS version 29 software. The results of this study show that the code of ethics, work experience, and audit situation influence the professional skepticism of auditors.

Effect Of Competency and Professional Skepticism On Audit Quality (Empirical Study at Public Accountant Office Bandung)

Abstract. The study aims to determine the effect of competency and professional skepticism on audit quality in Public Accountant Offices (KAP) in Bandung. This study uses a quantitative research method. The sample in this study consists of 35 respondents from 48 questionnaires distributed to auditors working at Public Accountant Offices (KAP) in Bandung. Data analysis in this study uses multiple linear regression models with IBM SPSS (Statistical Program for Social Science) software version 29.0. The results of this study indicate that the competency and professional skepticism variables simultaneously have a positive and significant effect on audit quality. Partially, the competency variable has a positive and significant effect on audit quality, while professional skepticism does not have a significant effect on audit quality. The Adjusted R Square value is 0.553 or 55.3%, while the remaining 44.7% is explained by other variables aside from the independent variables in this study.

The Ethical Calling for Humility, Flexibility, and Skepticism in (Mental) Healthcare

This article explores the complexities of psychiatric labeling, professional authority, and navigating the truth in mental healthcare. Advocating for professional humility and skepticism, it references critiques of psychiatry’s history, its current state, and other issues surrounding the state of healthcare’s integrity and ethical commitment to its patients. This article calls for nuanced understandings, prioritizing patient well-being, holistic care, and independently critical attitudes for, especially mental, healthcare professionals. Urging a shift toward patient-centered care and away from unethical systems of treatment, this article highlights the need for ongoing self-reflection and humility in striving for ethical practice.

Summary of Audit Judgment from Auditor Experience, Task Complexity, Professional Skepticism, and Goal Orientation

The goal of this study was to gather empirical evidence about the effects of auditor experience, task complexity, professional scepticism, and goal orientation on audit judgement. This study's population and sample included 35 respondents, all of whom worked as auditors for the South Sumatra Inspectorate. Questionnaires on a Likert scale of 1 to 5 were distributed directly to auditors to collect data. The data is analysed using Structural Equation Modelling using Partial Least Squares (PLS) and SmartPLS 4.0. The findings of this study revealed that auditor experience and professional scepticism have a favourable and significant effect on audit judgement. Meanwhile, task complexity and goal orientation have a positive but not statistically significant effect on audit judgement. Additionally, auditor experience, task complexity, professional scepticism and goal orientation influence audit judgement at the Inspectorate of South Sumatra Province by 50.6%.

The Relationship between Auditor’s Thinking Styles and Professional Skepticism: Who Should We Hire?

The Relationship between Auditor’s Thinking Styles and Professional Skepticism: Who Should We Hire?

The Effect of Professional Skepticism on Fraud Detection with Auditor Training as a Moderating Variable

The Effect of Professional Skepticism on Fraud Detection with Auditor Training as a Moderating Variable

Professional skepticism in the business valuation: Studies in the United States and Indonesia

Professional skepticism in the business valuation: Studies in the United States and Indonesia

Pengaruh Independensi, Fee Audit, Kompetensi Dan Skeptisme Profesional Auditor Terhadap Kualitas Audit (Studi Empiris Pada 14 Kantor Akuntan Publik di Provinsi Jawa Tengah)

The purpose of this study is to determine the Influence of Independence, Audit Fee, Competence and Professional Skepticism of Auditors on Audit Quality. The method used in this study is a quantitative method with a descriptive and quantitative approach. The data used is primary data. Data collection was carried out by field research, namely by distributing questionnaires to 70 respondents using non-probability sampling with a saturated sampling approach that has been tested for validity and reliability. To measure the magnitude of the influence of independent variables on dependent variables, classical assumption test analysis, multiple linear regression analysis test, product moment correlation test, determination coefficient test and hypothesis testing are used. Data processing using the Statistical Product and Service Solution (SPSS) 26. The results of the study show that in the hypothesis testing (t-test) the following results were obtained: (1) Independence has an effect on Audit Quality, where the value of 3.588 is greater than 1.670 and the significance value is 0.001 < 0.05 (2) Audit Fee do not have an effect on Audit Quality, where the values ​​of 0.659 are smaller than 1.670 and the significance value is 0.512 > 0.05 (3) Competence has an effect on Audit Quality Audit, where the value of 5.465 is greater than 1.670 and the significance value is 0.000 < 0.05 (4) Professional Skepticism has an effect on Audit Quality, where the Sig. value is 0.000 < 0.05. 0.008 < 0.05 and the value of 2.760 is smaller than 1.670 (5) The results of simultaneous hypothesis testing (f test) The influence of Independence, Audit Fee, Competence and Professional Skepticism of auditors has a positive effect on Audit Quality where the value of 18.867 is greater than 2.513 with a significance level of 0.000 < 0.05.