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Multivariate probit model for a priori assessment of behavioral risks in audit

Sergey Arzhenovskiy, Tatiana Sinyavskaya () and Andrey Bakhteev ()
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Tatiana Sinyavskaya: Rostov State University of Economics, Rostov-on-Don, Russian Federation
Andrey Bakhteev: Rostov State University of Economics, Rostov-on-Don, Russian Federation

Applied Econometrics, 2020, vol. 60, 102-114

Abstract: The paper presents an original approach to assessing behavioral risks during audit procedures based on a multivariate probit model. Dependent variables in the model were binary behavioral characteristics of individual responsible for financial statement: tolerance to legislation violations, pathological monetary type, propensity to increased risk, belief in impunity, and illiteracy in accounting legislation. It is found that the same factors tend to increase the chances of having one and reduce the chances of having another characteristic, which does not allow us to formulate the “highest risk” profile. The results can be used by auditors in the procedure of assessing the risks of falsification of financial statement.

Keywords: multivariate probit; endogeneity; behavioral characteristics; risk of financial statement falsification (search for similar items in EconPapers)
JEL-codes: C35 D03 G32 M42 (search for similar items in EconPapers)
Date: 2020
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