Current research in auditing

REG515 Current research in auditing

  • Learning outcome

    Learning outcome

    This short course is based on the literature syllabus of Current JDM Research in Auditing (Professor Kathryn Kadous, Goizueta Business School, Fall 2011) and addresses current judgment and decision-making (JDM) research in auditing. The list identifies areas that have resulted in larger contributions to the field in the past and continue to be important, as well as topics that are viewed as being of increasing importance.

    The purposes of this course are to get you acquainted with some of the more important recent research into auditor judgment and to provide you with some methodological background in JDM experimental research in accounting.

    Knowledge

    • The candidate is in the forefront of knowledge within his/her academic field

    Skills

    • The candidate can formulate problems, plan and carry out research and scholarly work

    Competence.

    • The candidate can identify new relevant auditing issues and carry out his/her research with scholarly integrity

  • Teaching

    Teaching

    Reading course.

  • Required prerequisites

    Required prerequisites

    Master in Accounting and Auditing.

  • Requirements for course approval

    Requirements for course approval

    Home assignments.

  • Assessment

    Assessment

    Summaries (60%) and an experiment (40% at the latest February 2013).

  • Grading Scale

    Grading Scale

    Grading: Pass / fail

  • Computer tools

    Computer tools

    Basic statistical tools (SPSS / STATA).

  • Semester

    Semester

    Currently not offered.

  • Literature

    Literature

    Thirty articles covering the following themes:

    1. Expertise and specialization
    2. Accountability and goals
    3. Auditing estimates, fair values, estimates
    4. Fraud detection
    5. Skepticism, critical thinking, and other individual characteristics
    6. Advice

     

    Optional readings:

    Bonner, S. E. 2008. Judgment and Decision Making in Accounting. Upper Saddle River, NJ: Pearson/Prentice-Hall.

     

    Libby, R. 1981. Accounting and Human Information Processing: Theory and Applications. Englewood Cliffs, NJ: Prentice-Hall, Inc., Chapter 1.

     

    Shadish, Cook, and Campbell. 2002. Experimental and Quasi- Experimental Designs for Generalized Causal Inference. Boston: Houghton-Mifflin, Chapters 1-3.

     

     

    1 Expertise and specialization

    Background readings:

    • Libby, R. and J. Luft. 1993. Determinants of judgment performance

    in accounting settings: Ability, knowledge, motivation, and

    environment. Accounting, Organizations and Society, 18 (5):

    425-450.

    • Baron, R. M., and D. A. Kenney. 1986. The moderator-mediator

    distinction in social psychological research: Conceptual, strategic

    and statistical considerations. Journal of Personality and Social

    Psychology 51 (6): 1173-1182.

     

    Optional:

    • Bonner, S. E. 2008. Judgment and Decision Making in

    Accounting. Upper Saddle River, NJ: Pearson/Prentice-Hall,

    Chapters 2, 3, 5.

     

    For discussion:

    • Tan, H.-T., and R. Libby. 1997. Tacit managerial versus technical

    knowledge as determinants of audit expertise in the field. Journal

    of Accounting Research 35 (1): 97-113.

    • Coyne, M. P., S. F. Biggs, and J. S. Rich. 2010. Priming/reaction-time

    evidence of the structure of auditors¿ knowledge of financial

    statement errors. Auditing: A Journal of Practice & Theory 29

    (1): 99-123.

    • Hammersley, J. S. 2006. Pattern identification and industry-specialist

    auditors. The Accounting Review 81(2): 309-336.

     

    2 Accountability and goals

    Background readings:

    • Kunda, Z. 1990. The case for motivated reasoning. Psychological

    Bulletin 108: 480-498.

    • Buckless, F. A., and S. P. Ravenscroft. 1990. Contrast coding: A

    refinement of ANOVA in behavioral analysis. The Accounting

    Review 65 (4): 933-945.

     

    Optional:

    • Bonner, S. E. 2008. Judgment and Decision Making in

    Accounting. Upper Saddle River, NJ: Pearson/Prentice-Hall,

    Chapter 7.

     

    For discussion:

    • Bagley, P. L. 2010. Negative affect: A consequence of multiple

    accountabilities in auditing. Auditing: A Journal of Practice &

    Theory 29 (2): 141-157.

    • Hackenbrack, K., and M. W. Nelson. 1996. Auditors¿ incentives and

    their application of financial accounting standards. The

    Accounting Review 71 (1): 43-59.

    • Kadous, K., S. J. Kennedy, and M. E. Peecher. 2003. The effect of

    quality assessment and directional goal commitment on auditors¿

    acceptance of client-preferred accounting methods. The

    Accounting Review 78 (3): 759-778.

     

    3 Auditing estimates, fair values, estimates

    Background readings:

    • Martin, R. D., J. S. Rich, and T. J. Wilks. 2006. Auditing fair value

    measurements: A synthesis of relevant research. Accounting

    Horizons 20 (3): 287-303.

    • Bullock, J. G., D. P. Green, and S. E. Ha. 2010. Yes, but what¿s the

    mechanism? (Don¿t expect an easy answer). Journal of

    Personality and Social Psychology 98 (r): 550-558.

     

    Optional:

    • Bonner, S. E. 2008. Judgment and Decision Making in

    Accounting. Upper Saddle River, NJ: Pearson/Prentice-Hall,

    Chapter 9.

     

    For discussion:

    • Agoglia, C. P., Doupnik, T. S. And Tsakumis, G. T. 2011.

    Principles-Based versus Rules-Based Accounting Standards: The

    Influence of Standard Precision and Audit Committee Strength on

    Financial Reporting Decisions. The Accounting Review 86 (3):

    747-767.

    • Nelson, M. W., and W. R. Kinney, Jr. 1997. The effect of ambiguity

    on loss contingency reporting judgments. The Accounting Review

    72(2): 257-274.

    • Earley, C. E., V. B. Hoffman, and J. R. Joe. 2008. Reducing

    management¿s influence on auditors¿ judgments: An experimental

    investigation of SOX 404 assessments. The Accounting Review 83

    (6): 1461-1485.

     

    4 Fraud detection

    Background readings:

    • Asare, S. K., and A. M. Wright. 2004. The effectiveness of alternative

    risk assessment and program planning tools in a fraud setting.

    Contemporary Accounting Research 21 (2): 325-352.

     

    For discussion:

    • Hammersley, J. S., K. Johnstone, and K. Kadous. 2011. How do audit

    seniors respond to heightened fraud risk? Auditing: A Journal of

    Practice & Theory 30 (3): 81-101.

    • Hoffman, V. B. and M. F. Zimbelman. 2009. Do strategic reasoning

    and brainstorming help auditors change their standard audit

    procedures in response to fraud risk? The Accounting Review 84

    (3): 811-837.

    • Hammersley, J. S., E. M. Bamber, and T. D. Carpenter. 2010. The

    influence of documentation specificity and priming on auditors¿

    fraud risk assessments and evidence evaluation decisions. The

    Accounting Review 85 (2): 547-571.

     

    5 Skepticism, critical thinking, and other individual characteristics

    Background readings:

    • Nelson, M. W. 2009. A Model and Literature Review of Skepticism in

    Auditing. Auditing: A Journal of Practice & Theory 28(2): 1-34.

    Hurtt, R. K. 2010. Development of a scale to measure professional

    skepticism. Auditing: A Journal of Practice & Theory 29 (1):

    149-171.

     

    Optional:

    • Bonner, S. E. 2008. Judgment and Decision Making in

    Accounting. Upper Saddle River, NJ: Pearson/Prentice-Hall,

    Chapter 4.

     

    For discussion:

    • Brewster, B. E. 2011. How a systems perspective improves

    knowledge acquisition and performance in analytical procedures.

    The Accounting Review 86 (3): 915-943.

    • McKnight, C. A., and W. F. Wright 2011. Characteristics of relatively

    high-performing auditors. Auditing: A Journal of Practice &

    Theory 30 (1): 191-206.

    • Robertson, J. C. 2010. The effects of ingratiation and client incentive

    on auditor judgment. Behavioral Research in Accounting 22 (2):

    69-86.

     

    6 Advice

    Background readings:

    • Soll, J. B. 1999. Intuitive theories of information: Beliefs about the

    value of redundancy. Cognitive Psychology 38(2): 317-346.

    Skim: Bonaccio, S., and R. Dalal. 2006. Advice taking and decision

    making: An integrative literature review, and implications for the

    organizational sciences. Organizational Behavior and Human

    Decision Processes 101: 127-151.

     

    For discussion:

    • Ng, T., and P. Shankar. 2010. Effects of technical department's

    advice, quality assessment standards and client justifications on

    auditors' propensity to accept client-preferred accounting

    methods. The Accounting Review 85 (5): 1743-1761.

    • Gold, A., R. Knechel, and P. Wallage. 2011. The effect of strictness of

    consultation requirements on fraud consultation. Working Paper,

    Erasmus University.

    • Kadous, K., J. Leiby, and M. E. Peecher. 2011. How Do Auditors

    Weight Informal Advice? The Joint Influence of Advisor

    Affiliation Strength and Advice Justifiability. Working paper,

    Emory University.

Overview

ECTS Credits
7.5
Teaching language
English.
Semester
Spring

Course responsible

Prof Bill Messier and Prof Aasmund Eilifsen. Accounting, Auditing and Law.