The present auditing environment involves increasing audit costs and potential legal liability. Increasing audit costs mandate methods to make the audit more efficient, while the credibility of audited financial statements depends on audit effectiveness. Internal accounting control evaluation impacts both the efficiency and effectiveness of the audit process since this judgment establishes a basis for determining the timing, nature and amount of auditing procedures to be performed. Results of previous research, however, have indicated that variance does exist in auditors' evaluations of internal controls. While individual differences have been given as an explanation of the variance, no research has successfully isolated which individual differences relate to differences in judgment. This study examined the possibility that cognitive style, defined as the mode of processing which individuals use in their perceptual activities, was an individual difference which could explain some of the variance in internal control judgments. The Myers-Briggs Type Indicator (MBTI) was used to measure the cognitive style of auditors. A second instrument, an audit judgment case, was prepared by the researcher to elicit (1) an auditor's estimate of the reliability of internal controls in a computerized payroll application, and (2) his assessment of the perceived relevance of case information to his reliability judgment. Ninety auditors attending training sessions held by six Dallas CPA firms completed the MBTI and case description. These instruments were administered by the researcher during the Summer of 1984. The participants were primarily senior-level auditors with three years' experience. The statistical methods used in this study included the t-test and ANOVA. Results of the study indicated lack of consensus in the internal control reliability estimates of the participants. Differences were noted in the information the sensing and intuitive types identified as important to their reliability estimates. The number of cues identified as important by the participants was not significantly related to their perceptual mode (sensing or intuitive) or to their internal control reliability judgment.

This research was undertaken to test the effects of conservatism on the decisions made by auditors. The evaluation of the research results provided by the two psychological tests indicated that, when measured on the construct of resistance to change, auditors as a group are essentially heterogeneous and slightly conservative. However, the auditors' test scores on the construct of aversion to risk reflected a homogeneous group who were distinctly conservative. Based on these results, this research seems to indicate that the firm effect is more important in auditors' decision making than personal characteristics except, perhaps, in the area of compliance testing decisions. If this is indeed the case, it could be said that the different audit philosophies held by the public accounting firms and instilled in their auditors may be the prime cause of the substantial differences that have been continuously found in auditor judgments.

Sustainability reporting has been increasing in popularity in the last decade giving medium tolarge companies a tool to communicate with their users about their sustainability activity. Asglobalization and technology were introduced and increased in demand many violations startedby companies including human right violation, economic inequality, pollution, etc. Thisviolation led to different stakeholders demanding for companies be transparent and report ontheir sustainability activity through sustainability reporting.As sustainability reporting increased in popularity many challenges arose including a lack ofhomogeneity and comparability for the users and the firms themselves. Many standards andguidelines were created and are still being created to minimize the problem that firms,stakeholders, and auditors face. However, many standards and guidelines introduced lead tomaking the job of auditors more complex and harder as they must know and understand all thestandards available.Multiple studies were done regarding sustainability reports and the absence of one singleofficial standard. The studies explored the subject with interviews or case research tounderstand the consequence or effect that has on auditors and/or audit quality. Similar to thosestudies, this paper also follow the previous research by answering the following question thatwas posed by the authors: “What are the consequences of the absence of one single officialstandard in sustainability reporting on the audit quality?”. To answer this question, the authorsinterviewed 10 participants who work with auditing, accounting, and analyzing sustainabilityreports which helped the thesis with a practical contribution. Furthermore, the thesis alsocontributed to the knowledge by examining the results using Emergency Theory, LegitimacyTheory, and Complexity Theory. This thesis provides evidence regarding the consequence ofhaving multiple standards with low law requirements for sustainability reporting and why thereis a need for one single official standard.The findings of this thesis shows that auditors are face multiple challenges when it comes tonot having one official standard. The challenge affects the audit quality when auditingsustainability reports. The results show that sustainability is very multidimensional whichmakes the topic complex to auditors. Auditors also face the challenge of sustainability beingan emerging concept in the accounting domain which leads to not much research and theoriespresent to produce frameworks and standards for sustainability reports.

The third general standard of fieldwork requires auditors to maintain a skeptical mindset with regards to the collection and critical assessment of audit evidence. While professional skepticism is frequently referenced by professional standards, a lack of precision in defining the concept presumably leads to variation in how skepticism is exercised in practice. Drawing on theories from the fields of psychology, economics and organizational justice, this dissertation considers different perspectives of what constitutes sufficient professional skepticism and examines how those perspectives differ between audit practitioners and regulators. First, I consider competing perspectives of professional skepticism – neutral versus presumptive doubt – and whether asking auditors to adopt alternative perspectives of skepticism may have implications for audit efficiency and effectiveness. While, too little skepticism may endanger audit effectiveness and lead to audit failure or enforcement action, too much skepticism may arguably lead to unnecessary costs and inefficiency. Second, I consider whether the nature of the auditor-client relationship threatens an auditor’s ability to maintain an attitude of professional skepticism. For example, theoretical perspectives from the fields of psychology and economics suggest that auditors may, consciously or unconsciously, be less skeptical of clients with whom they have developed close, positive working relationships or financial dependencies. More specifically, I consider whether skeptical behavior is impeded by management who display low-risk attitudes towards fraud or by client’s who are considered to be highly important to the profitability of the local office. Finally, I examine how professional skepticism is defined from a regulator’s perspective. When a public company is accused of fraudulent financial reporting, regulators may determine iii that the audit performed on the fraudulent financial statements was deficient. Prior research has suggested that in such cases, insufficient skepticism is often a leading cause of alleged audit failure. Within a fairness theory framework, this study examines enforcement actions against auditors between 1999 and 2009, and identifies certain factors that are associated with a citation for a lack of professional skepticism. Overall, results suggest that regulators approach the issue by determining whether auditors should have been more skeptical. Factors found to affect this determination include whether the auditor was perceived as having been aware of an elevated risk of fraud or whether the client was accused of having provided the auditor with false or misleading information during the course of their investigation.

Materiality is a pervasive accounting concept that has defied a precise quantitative definition. The Capital Asset Pricing Model (CAPM) approach to materiality provides a means for determining the limits that bound materiality. Also, the approach makes it possible to locate the point estimate within these limits based on certain assumptions. / Master of Science

The need to protect information systems or assets remains crucial today. Innovations in technology have led to rapid developments and as technology continues to advance, so is the need to protect information systems. Amongst numerous effects of cyber-attacks on organizations, huge financial losses which in turn affect the economy have since been reported. Cyber security audits need to be strengthened to tighten the protection of information systems. The importance of cybersecurity audits is widely endorsed in literature. Nonetheless, frameworks used to audit cybersecurity are viewed as‘sometimes' weak links to cybersecurity due to their drawbacks in auditing cyber security. A review of literature indicated that cyber-attacks are more rampant in the African continent with the financial sector being the most targeted. Literature also highlighted that the use of relevant frameworks for auditing cyber security improves the quality and effectiveness of audits thereby enhancing cyber security. Studies in information systems have mostly looked at the adoption of frameworks, types of cyber threats and tools needed to audit. Nonetheless, it is important to note that few scholars have examined the applicability and effectiveness of the existing frameworks in auditing cyber security. Furthermore, previous studies emphasize on enhancing cyber security without a particular focus on auditing cyber security including assessing the role of the auditor during the process. As a result, this study looked at cyber security from an auditing perspective with a particular focus on the strengths and weaknesses of the current frameworks that are being used to audit cyber security including. The study also looked at the factors that enhance the effectiveness of cyber security audits. The study draws from different theories, literature and from the strengths and drawbacks of existing frameworks to create an explanatory model. To statistically test and evaluate the model, a quantitative research approach was employed to collect, analyze, and interpret data from South Africa. Data was collected using a questionnaire which was distributed to IT auditors and cyber security professionals from the Information Systems Audit and Control Association (ISACA) South African chapter members. The National Institute of Standards and Technology (NIST) cyber security framework was found to be the widely adopted framework followed by the International Organization for Standardization (ISO) standards, with the Control Objectives for Information Technologies (COBIT) being the least employed framework. The COBIT framework was found to be more aligned to Information Technology governance rather than cyber security. Furthermore, results of this study indicate that effectiveness of cyber security audits is dependent upon competencies of auditors including their ethics and integrity. Results further indicate that frameworks used for auditing are effective to some extent if properly implemented. A proper alignment of an auditor's competencies which include ethics and integrity, and an adoption of a relevant framework will result in effective cyber security audits that reduce the risks of cyber-attacks. Concerning the contribution to practice, results from this study can help organizations to determine and review focus areas of cyber security auditing that they need to emphasize and develop on. Furthermore, the developed model can be used by auditors to develop an audit plan and conduct audits that are effective in identifying, protecting, detecting, preventing, and recovering information systems or assets. The methodological, theoretical, and practical contributions are further discussed in this thesis along with limitations, recommendations, and areas for future research.

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To assess fraud risk, auditors collect evidence in a sequential manner by reviewing workpaper documentation, and by collecting corroborating and clarifying information from financial (management) personnel and nonfinancial (operating) personnel. SAS 99 (AICPA, 2002) noted that audit evidence gathered from financial personnel may be susceptible to deception. In addition, prior researchers have found auditors to be poor at detecting deception immediately following deceptive communication. Though the audit process is sequential and iterative, these studies measured auditors– ability to detect deception at a single point and did not provide corroborating evidence after the deceptive communication for auditors to revise their judgments. In this study, I examined auditors’ fraud risk assessments and truthfulness judgments throughout the audit process when there was an attempt at deception by management (financial) personnel. The belief adjustment model provided a framework to examine auditors’ initial judgments, their judgments directly following a deception attempt by financial personnel, and their judgments after receiving corroborating evidence from nonfinancial personnel. Sixty-four experienced auditors electronically completed one of four randomly assigned cases and, within each case, assessed the fraud risk, truthfulness, trustworthiness, and reliability of financial personnel at multiple points for a fictitious client. I manipulated the presence (absence) of fraud and the level of experience of the source of corroborating evidence (operating personnel). I hypothesized that auditors would not be able to differentially evaluate fraud risk and truthfulness judgments of financial personnel between the fraud and no fraud conditions when exposed to workpaper documentation and deceptive client inquiry evidence by management (financial personnel). However, I expected to find that auditors– would update their fraud risk and truthfulness judgments as they reviewed audit evidence from nonfinancial (operating) personnel. The results indicate that auditors in this study are not able to appropriately assess fraud risk and the truthfulness of financial personnel following the review of workpaper and client inquiry evidence. While the client was deceptive in the fraud condition only, auditors did not differentially assess the fraud risk and truthfulness of financial personnel between the fraud and no fraud conditions. After auditors reviewed evidence from nonfinancial personnel, in the presence of fraud, auditors increased their fraud risk and decreased their truthfulness judgments of financial personnel as inconsistent evidence was presented from a corroborating source. Therefore, in the presence of fraud, auditors improved the effectiveness of the audit process by appropriately increasing their fraud risk assessments in light of inconsistent audit evidence from nonfinancial (operating) personnel. Of equal importance, in the absence of fraud, auditors decreased their fraud risk assessments as consistent evidence was presented from a corroborating source. Therefore, auditors increased the efficiency of the audit process by appropriately decreasing their fraud risk assessments after integrating consistent audit evidence from nonfinancial personnel into their judgments. Further, I observed that these auditors revised their fraud risk assessments to a greater extent when audit evidence was provided by a source with a higher level of experience. Though prior research has found auditors to be poor at detecting deception, the results of this study indicate that auditors will increase or decrease their fraud risk assessments and truthfulness judgments based on the consistency of audit evidence gathered from a corroborating source. Therefore, in practice, auditors may be able to detect deception as the audit progresses. / Ph. D.

This study aims to explore the relationship between AI-enabled enterprises and regulatory compliance, particularly in the integration of Generative AI in auditing and accounting firms. It identifies challenges and provides actionable recommendations for firms adopting AI while ensuring legal compliance. Additionally a qualitative research methodology is used with a thematic analysis approach to explore the integration of Generative AI in auditing and accounting firms in Sweden. Data are collected through semi-structured interviews with four professionals from large auditing firms. This method allows for an in-depth examination of the implications of AI adoption drawing from firsthand insights to identify emerging patterns and themes. Discovering that Swedish auditing and accounting firms adopt Generative AI technologies driven by efficiency gains and enhanced service delivery. This strategic move requires balancing efficiency with regulatory compliance, emphasizing alignment with laws and internal rules. AI development frameworks guide firms in ethical governance, supported by continuous training for staff. Ultimately, this strategic approach ensures both efficiency and ethical integrity in AI adoption.