Professional Skepticism Research Articles

Attention Deficit Hyperactivity Disorder and Professional Scepticism

Attention deficit hyperactivity disorder (ADHD) is a neurodevelopmental condition that can affect professional scepticism, a critical aspect of effective auditing. This study examines the impact of ADHD, assessed using the Integrated Visual and Auditory‐2 Continuous Performance Test, on the professional scepticism of external auditors. Results indicate a negative association between ADHD and professional scepticism, suggesting that higher levels of ADHD reduce sceptical tendencies. However, the study finds that job satisfaction significantly mitigates the adverse effects of ADHD on professional scepticism. Specifically, findings from the Johnson‐Neyman analysis reveal that high job satisfaction mitigates the adverse impact of ADHD on scepticism. This study highlights the need for audit firms to consider ADHD‐related challenges. It emphasises the importance of creating a supportive work environment to sustain professional scepticism, which is vital for enhancing audit quality and effectively managing cognitive diversity in the workforce.

Professional Skepticism and Financial Statement Fraud Detection among Malaysian and Indonesian Auditors: A Cross-Cultural Analysis

Recent financial scandals highlight flaws in auditor quality, signalling a decline in professional skepticism, particularly in regions like Malaysia and Indonesia with diverse regulatory frameworks, cultures, and environments. This study examines the relationship between six professional skepticism traits and fraud detection by comparing Malaysian and Indonesian auditor utilising a questionnaire based on Hurtt’s 30-item scale to assess auditors’ professional skepticism. A purposive samples of 187 Malaysian auditors (MIA members) and 173 Indonesian auditors (IAPI members) was surveyed. Partial Least Squares Multi-Group Analysis (PLS-MGA) revealed significant differences between the two countries in two key traits: interpersonal understanding and suspension of judgment which weakened (improve) Malaysian (Indonesian) auditors’ ability to detect fraud respectively. Indonesian auditors, on the other hand, may benefit from developing these traits to enhance fraud detection. The variance in skepticism traits is attributed to differences in professional environments, with Malaysian auditors primarily from Big 4 firms, while Indonesian auditors are predominantly from non-Big 4 firms. Targeted training for Indonesian auditors, focusing on interpersonal understanding and suspension of judgment, could enhance their fraud detection capabilities. This study contributes to the literature by identifying cultural and professional differences as key factors affecting skepticism, providing a basis for strategies to improve auditing practices in Indonesia.

Analysis of Professional Skepticism and APIP Competence on Audit Quality (A Study at the Inspectorate of Southwest Aceh Regency)

This study aims to analyze the influence of professional skepticism and the competence of APIP (Internal Government Auditors) on audit quality at the Inspectorate of Southwest Aceh Regency, using a Likert scale. The research is motivated by studies highlighting the impact of audits on government losses caused by the development of the Integrated Information System of the Abdya Creative Industry Center (PIKA). The population of this study consists of all staff at the Inspectorate Office of Southwest Aceh Regency, totaling 49 individuals, with a purposive sampling technique and a sample size of 31 auditors involved in field audits and evidence documentation. The results of the study show that professional skepticism does not have a significant impact on audit quality, while APIP competence has a positive and significant impact on audit quality. These findings provide important insights for the Inspectorate of Southwest Aceh Regency to focus more on improving auditor competence to enhance audit quality outcomes.

PENGARUH KOMPETENSI, PENGALAMAN AUDIT, TEKANAN WAKTU, SKEPTISME PROFESIONAL TERHADAP KEMAMPUAN AUDITOR MENDETEKSI FRAUD LAPORAN KEUANGAN

This objective of this research to empirically analyze the influence of competency, time pressure, audit experience, and professional skepticism on auditor ability in detecting fraud on financial statements. The population in this research are auditors who worked on Public Accounting Firm in DKI Jakarta area. Primary data collection method used is questionnaire method. The data are analyzed by using Moderate Regression Analyze (MRA). The analytical tool used to test the hypothesis is SPSS 25. The result showed that Competency, Audit Experience, and Proffesional Skepticism have a positive impact on auditors ability of fraud detection. Value of the coefficient of determination indicates that together the Competency, Time Pressure, Audit Experience and Proffesional Skepticism contribute to dependent variable (Auditors Ability of Fraud Detection in Financial Statement) of 84,8% while the remaining 15,2% are influenced by other autside factor model. Copyright © 2024 by Authors, Published by Jurnal Bisnis Terapan. This work is licensed under a Creative Commons. Attribution-ShareAlike 4.0 International License

Pengaruh Pendidikan, Pelatihan, dan Pengalaman Terhadap Skeptisisme Profesional Auditor Pada KAP di Kota Batam

Maintaining an inquisitive mindset while presenting audit data critically is an approach that displays professional skepticism. To approve or reject findings by offering corrective measures, the auditor must first gather information about the activities of the audited organization, compare it with predetermined criteria, and then draw conclusions. An auditor has an obligation to uphold his profession by doing what is asked of him. In addition to stating consideration for the reliability of financial statements, it is their professional duty to adhere to the. The public and consumers alike will evaluate certified financial reports, so it is important to approach such reports with a healthy level of skepticism. The main objective of this research is to determine whether the professional skepticism of auditors at KAP in Batam City varies according to level of education, training and work experience. Saturated sampling was used to determine the sample size of 45 respondents for this quantitative research procedure. Using SPSS 26 software, this reconnaissance yielded considerable results. Education has a significant positive effect because the T test value of 0.031 is less than 0.05. Since the calculated T value of 0.000 is lower than 0.05, this indicates that training has a statistically significant positive impact. The stay experience is positive with a T test score of 0.000, lower than the significance level of 0.05. With an F significance level of 0.00 which is less than 0.05, the F test shows that the auditor's education, training and experience influence their professional skepticism. Therefore, auditors' professional skepticism is significantly influenced by their education, training, and experience. The elements influencing auditors' professional skepticism may be better understood with these data.

"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

You are the auditor: A ChatGPT-based multiple choice exam

This case study examines the use of ChatGPT, a chatbot that utilises generative artificial intelligence (GenAI) technology, to amplify the efficacy of multiple-choice examinations in a financial accounting course. The primary objective is to introduce students to the advantages and limitations of GenAI tools such as ChatGPT while simultaneously fostering the development of critical thinking skills in their application. By demonstrating the tool’s ability to give both correct and incorrect responses, students will deepen their understanding of its appropriate use and develop a professional scepticism towards AI-generated responses, which can ‘hallucinate’ and yield incorrect answers to AI prompts. Furthermore, this study seeks to explore the role of AI-supported tests in fostering students’ problem-solving abilities and analytical acumen. The research examines student performance by giving exam questions, an AI-generated response and additional alternative answers in a multiple-choice format. On average, ChatGPT 3.5 responds with correct answers to accounting questions about 50 per cent of the time. To succeed in such examinations, students must evaluate if the ChatGPT answer is correct or if another of the given answers is more accurate. The case study also highlights the advantages and challenges of incorporating AI into accounting pedagogy, addressing concerns about the assimilation of this advanced technology.

Moderate of Professional Skepticism: Moral Reasoning, Independence, and Auditor Competence on Audit Quality

This study aims to provide empirical evidence on the influence of moral reasoning, independence and auditor competence on audit quality with professional skepticism as a moderation. In this study, the population used is all Public Accounting Firms in Bali, totaling 17 spread across the Bali region. The sample is part of the number and characteristics of the population. The sample of this study was 27 auditors. The data analysis technique in the study used quantitative methods. The results of the study indicate that auditor moral reasoning does not have a significant influence on audit quality. Although moral reasoning is considered important in maintaining auditor ethics and integrity, in the context of this study, it has not been proven to significantly improve audit quality. Independence, which in theory is an important pillar in the implementation of an audit, also does not show a significant influence on audit quality. This shows that auditor independence alone is not enough to guarantee better audit quality in the context of this study. Auditor competence has been shown to have a significant and positive influence on audit quality. Auditors who have high knowledge and skills can produce better quality audits, emphasizing the importance of developing competence as a key factor in audit practice. The conclusion of this study is that professional skepticism moderates the influence of moral reasoning and competence on audit quality, while professional skepticism cannot moderate the effect of independence on audit quality.

Pengaruh Skeptisme, Pengalaman Auditor Dan Self-Efficacy Terhadap Audit Judgement Dengan Time Pressure Sebagai Variabel Moderating Pada Badan Pemeriksa Keuangan (BPK) Provinsi Sumatera Utara

The financial report opinion with the title of Unqualified (WTP) Opinion from the Supreme Audit Agency (BPK) for the 2023 Regional Government Financial Report (LKPD) and is the 10th consecutive WTP Opinion obtained by the North Sumatra Provincial Government since 2015. The opinion results from BPK are interesting to study further because the North Sumatra Provincial Government received an Unqualified Opinion (WTP) but there is still a lot of corruption or fraud within the North Sumatra Provincial Government. This is a real phenomenon that occurs in the Government of North Sumatra Province. Providing an audit opinion on the Local Government Financial Statements is based on an audit judgment made by an auditor, with reference to the following aspects: (a) Conformity with Government Accounting Standards (SAP); (b) Effectiveness of Internal Control; (c) Compliance with statutory provisions; and (d) Full Disclosure. There are several factors that can affect audit judgment, namely pressure, auditor experience, professional skepticism and self-efficacy. The type of research that will be used to analyze this research is a quantitative type with an associative type of approach that analyzes data in the form of numbers and then discusses it through the calculation of the score or value of each variable, then proceeds with statistical analysis carried out with the help of the SEM PLS program to prove the influence between the observed variables. The sample in this study were 64 auditors at the Supreme Audit Agency (BPK) of North Sumatra Province. The data was processed using the SEM method with Smart PLS 3.0 software. The results of this study indicate that skepticism affects audit judgment, auditor experience affects audit judgment, self efficacy affects audit judgment, skepticism affects audit judgment moderated by time pressure, auditor experience affects audit judgment moderated by time pressure, audit judgment affects audit judgment moderated by time pressure.

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.

Can Thinking about Alternative Explanations Promote Professional Skepticism?

SYNOPSIS We conduct an experiment with practicing Big 4 audit seniors and demonstrate that generating counterexplanations for an event in an unrelated task prior to completing audit planning tasks activates a counterfactual mindset that enhances auditors’ professional skepticism. This approach to activating professional skepticism can be implemented without auditor training and can be deployed across many different audit tasks. Overall, the experiment indicates that activation of a counterfactual mindset has significant potential to enhance audit quality.

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.

Professional skepticism and audit judgment: The moderating effect of audit experience

An entity's financial performance, position, and cash flows are structurally represented in financial statements, which also capture management's accountability for financial resources. To safeguard the credibility of financial information and bolster public trust, the public accounting profession is instrumental in rendering opinions on the reliability of these financial statements. To validate these financial statements and form views about the fairness of the financial information given, independent auditors conduct an audit procedure. The assessment of financial statements is greatly impacted by the audit judgment, which is an essential part of the auditing process. The impact of professional skepticism on audit judgment is investigated in this study. This study also investigates auditor experience's potential to function as a moderating variable. A total of 76 auditors from public accounting companies registered in Bali Province were the samples evaluated. Purposive sampling was used in this study to choose the sample, and auditors with at least a year of experience were required. Both linear regression and moderated regression analysis (MRA) are the analysis methods employed. The analysis's findings demonstrate that professional skepticism improves audit judgment. The association between audit judgment and professional skepticism cannot be mitigated by audit expertise. The results imply that the relationship between professional skepticism and the caliber of audit judgment is not always strengthened by auditor experience. It appears that both seasoned and inexperienced auditors are capable of exhibiting professional skepticism and rendering sound audit decisions.

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 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.