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Home > Business and Economics > Finance and accounting > Accounting > Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Judgments: (English)
Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Judgments: (English)

Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Judgments: (English)

          
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About the Book

The audit process changed in a number of ways in recent years: audits have become increasingly more risk based, and assessment of fraud risk and detection of fraud are important aspects of auditors' work. The question of how assessed fraud risk can be combined with the traditional risks assessed and how such integration will affect planning is still unanswered. This study examines the effects of explicit integration of fraud risk assessment in the risk of material misstatement (RMM) on auditors' planning judgments. I test the effects of the integration of fraud risk assessments in the risk of material misstatement in an experiment with audit seniors and managers. Participants make risk assessments and audit planning judgments using either the traditional view of RMM based on source of misstatement (i.e., inherent and control risk) or the RMM based on type of misstatement (i.e., error risk and fraud risk). Fraud risk is manipulated using varying levels (high and low) of fraud risk factors. The results are consistent with the hypotheses indicating that auditors in the type-based RMM group assess overall risk of material misstatement to be higher than auditors in the source-based RMM group. In addition, results show that RMM assessments for the type-based group are more sensitive to the level of fraud risk than those of auditors in the source-based group. With respect to planning judgments, auditors in the type-based group make more conservative planning judgments (higher number of budgeted hours and lower tolerable misstatement for the accounts receivable audit) than auditors in the source-based group. Further investigation of the nature of procedures chosen for varying levels of fraud risk show that auditors in the type-based group address higher fraud risk with more "nonstandard" procedures (procedures that are perceived as particularly useful in addressing fraud risk) than do auditors in the source-based group. Auditors in both RMM groups respond to varying fraud risk levels by adjusting their assignment of work hours to audit staff of varying experience levels. That is, more hours are assigned to more experienced audit staff in high risk situations. Overall, the results show that auditors in the type-based group make more conservative risk assessments and create audit plans that are more sensitive to fraud risk levels than auditors in the source-based group.


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Product Details
  • ISBN-13: 9781243510976
  • Publisher: Proquest, Umi Dissertation Publishing
  • Publisher Imprint: Proquest, Umi Dissertation Publishing
  • Height: 254 mm
  • No of Pages: 88
  • Series Title: English
  • Weight: 191 gr
  • ISBN-10: 1243510978
  • Publisher Date: 01 Sep 2011
  • Binding: Paperback
  • Language: English
  • Returnable: N
  • Spine Width: 6 mm
  • Width: 203 mm


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Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Judgments: (English)
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Integration of Fraud Risk in the Risk of Material Misstatement and the Effect on Auditors' Planning Judgments: (English)
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