There is widespread recognition in the accounting literature that properly directed audit effort is critical to an effective and efficient engagement. Auditors assess the risks of managerial misstatements and use these risks to plan audit procedures. Prior studies examining the linkage between assessed risk and audit effort report weak and conflicting results. The unobservable nature of the audit process necessitates the use of proxies to capture assessed risks and audit effort. This study utilizes proprietary audit workpaper data to obtain better measurement of assessed risks and effort. These improved measurements provide stronger evidence on whether changes in assessed risks will affect the nature, timing, and extent of audit testing. This linkage is examined first using OLS and then an instrumental variables approach to address potential simultaneity in determining the nature, timing, and extent of substantive effort. In contrast to prior research, results suggest that auditors vary the nature, timing, and extent of substantive effort in response to assessed auditee risks.
| Identifer | oai:union.ndltd.org:arizona.edu/oai:arizona.openrepository.com:10150/290245 |
| Date | January 2001 |
| Creators | Kizirian, Tim |
| Contributors | Felix, William F. |
| Publisher | The University of Arizona. |
| Source Sets | University of Arizona |
| Language | en_US |
| Detected Language | English |
| Type | text, Dissertation-Reproduction (electronic) |
| Rights | Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author. |
Page generated in 0.0015 seconds