Probabilistic Audits and Misreporting – the Influence of Audit Process Design on Employee Behavior

Corinna Ewelt-Knauer, Anja Schwering and Sandra Winkelmann

European Accounting Review, 2021, vol. 30, issue 5, 989-1012

Abstract: We investigate how the design of audit processes influences employees’ reporting decisions. We focus specifically on detective employee audits for which several employees are randomly selected after a defined period to audit their ex-post behavior. We investigate two design features of the audit process, namely, employee anonymity and process transparency, and analyze their impact on misreporting. Overall, we find that both components influence the extent of individuals’ misreporting. A nonanonymous audit decreases performance misreporting more than an audit in which the employee remains anonymous. Furthermore, the high incidence of performance misreporting in the case of anonymous audits can be decreased when the process transparency is low. Thus, our study informs accountants about how the two design features of employee anonymity and transparency of the audit process can be used to constrain performance misreporting to increase the efficiency of audits.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09638180.2021.1899014 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:taf:euract:v:30:y:2021:i:5:p:989-1012

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REAR20

DOI: 10.1080/09638180.2021.1899014

Access Statistics for this article

European Accounting Review is currently edited by Laurence van Lent

More articles in European Accounting Review from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().