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iDEA: Drexel E-repository and Archives > Drexel Academic Community > Bennett S. LeBow College of Business > Department of Accounting and Tax > Faculty Research and Publications (Accounting and Tax) > The effect of fraud assessment documentation structure on auditors’ ability to identify control weaknesses: The moderating role of reviewer experience

Please use this identifier to cite or link to this item: http://hdl.handle.net/1860/1828

Title: The effect of fraud assessment documentation structure on auditors’ ability to identify control weaknesses: The moderating role of reviewer experience
Authors: Agoglia, Christopher P.
Beaudoin, Cathy
Tsakumis, George T.
Keywords: Review process;Control environment;Fraud;Control weakness;Audit documentation;Task-specific experience
Issue Date: Aug-2006
Citation: Paper presented at the 2006 American Accounting Association Annual Meeting, Washington, D.C.
Abstract: The current regulatory environment, brought on by recent high-profile audit failures, expands the auditor’s role in detecting fraud. For example, auditors must now provide an opinion on clients’ internal controls, addressing their effectiveness at preventing or detecting fraud. While the structure of workpaper documentation has been shown to affect audit workpaper preparers’ assessments of overall fraud risk, prior research has not addressed the role their reviewers’ experience plays in mitigating documentation structure effects. Our study matches audit workpaper preparers with reviewers to investigate whether reviewer task-specific experience moderates the effect of fraud assessment documentation structure on the audit review team’s ability to identify the presence of significant control weaknesses. Consistent with expectations, we find that preparers who are required to document components of their fraud assessments provided more favorable (and lower quality) assessments of significant control weaknesses than those using either a supporting or balanced documentation structure. More importantly, results indicate that reviewer task-specific experience moderated the effect of documentation structure on reviewers’ identification of control weaknesses such that experienced reviewers compensated more for the effect of component documentation than reviewers with less experience. Our results suggest that experienced reviewers are better able to overcome challenges presented by documentation structure and more effectively assess the impact of control weaknesses than their less experienced counterparts. These results provide support for new regulations emphasizing the role of experience during the control assessment process.
URI: http://hdl.handle.net/1860/1828
Appears in Collections:Faculty Research and Publications (Accounting and Tax)

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