The Influence of Partners? Views on Chinese Auditors? Judgments Related to Professional Scepticism

Sammy Xiaoyan Ying () and Chris Patel ()
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Sammy Xiaoyan Ying: Macquarie University
Chris Patel: Macquarie University

No 2304228, Proceedings of Business and Management Conferences from International Institute of Social and Economic Sciences

Abstract: Professional scepticism remains one of the most important and controversial topics in auditing. This study examines the influence of partners? views on auditors? professional scepticism in China. This examination is important given the hierarchical structures of audit firms, and even more important in China given the strong cultural emphasis on subordination and obedience. Specifically, this study invokes social contingency theory to provide insights into partner influences on auditors from an accountability perspective. It is expected that auditors with knowledge of partners? views are likely to be susceptible to pressure to align their judgments to the partners? views, and such pressure influences auditors? professional scepticism when exercising judgments. A between-subjects experiment was conducted with practicing auditors in China. The independent variable, partners? views on professional scepticism, was manipulated across three groups: (1) a control group, in which there is no information about partners? view, (2) a group in which partners? known views reflect low emphasis on professional scepticism, or (3) a group in which partners? known views reflect high emphasis on professional scepticism. The results provide evidence that when partners? views on professional scepticism are known, auditors perceive considerable amount of pressure to follow the partners? views. Further, the results show that when partners? views reflect low emphasis on professional scepticism, auditors? levels of professional scepticism are significantly lower compared to when partners? views are unknown. However, when partners? views reflect high emphasis on professional scepticism, auditors? levels of PS do not significantly differ from when partners? views are unknown. Furthermore, the results show that when auditors learn partners? views, increased intensity of perceived pressure can strengthen the effects of partners? influences on auditors? professional scepticism. The findings of this study have important implications for auditing regulators, professionals, and audit firms.

Keywords: Professional Scepticism; Auditing; China; Partner influences (search for similar items in EconPapers)
JEL-codes: C93 M40 M42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2015-06
New Economics Papers: this item is included in nep-acc, nep-cna and nep-exp
References: View references in EconPapers View complete reference list from CitEc
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Published in Proceedings of the Proceedings of the 1st Business & Management Conference, Vienna, Jun 2015, pages 352-383

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Persistent link: https://EconPapers.repec.org/RePEc:sek:ibmpro:2304228

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