Integrating business risk into auditor judgment about the risk of material misstatement: The influence of a strategic-systems-audit approach

Joseph J. Schultz , James Lloyd Bierstaker and O'Donnell, Ed

Accounting, Organizations and Society, 2010, vol. 35, issue 2, pages 238-251

Abstract: Auditing standards direct auditors to consider business risk and other risk factors when they evaluate the overall risk of material misstatement during the planning phase of an audit. Large audit firms generally use either a strategic-systems approach (SSA) or a transaction-focused approach (TFA) to evaluate misstatement risk. This study used data from a laboratory experiment to examine whether (1) being trained to use either SSA or TFA and (2) analyzing information organized in an SSA or TFA format influence the extent to which auditors integrate knowledge of business risk into their judgment about the likelihood of financial misstatement. Only auditors trained to use SSA who analyzed information provided in an SSA format effectively integrated business risk assessments with their assessment of the risk of material misstatement.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VCK ... 8f06690f7aaa271610bc
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:aosoci:v:35:y:2010:i:2:p:238-251

Access Statistics for this article

Accounting, Organizations and Society is edited by Christopher Chapman

More articles in Accounting, Organizations and Society from Elsevier
Series data maintained by Wendy Shamier ().