The effects of auditors' attention during evidence evaluation on auditors' responses to fraud risk
Austin, Ashley Albers
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Auditors must remain alert for fraud during the evidence evaluation stages of the audit because evidence could contain information relevant to fraud that was unknown to the audit team during planning and that necessitates modifying the planned audit procedures in order to effectively respond to fraud risks. However, regulators note instances in which auditors do not sufficiently consider fraud during evidence evaluation. I experimentally examine whether auditors’ attention to fraud while performing the planned audit procedures differs due to audit conditions that prompt auditors to perceive the task of considering fraud as more or less important, and whether an intervention that I develop based on psychology theory can increase auditors’ attention. I find that auditors devote less attention to fraud when audit conditions prompt lower rather than higher perceived task importance. I also find that my intervention increases this attention under lower perceived task importance conditions. Importantly, I also find that these attention effects subsequently affect auditors’ responses to fraud risks. Thus, my study identifies and investigates a new factor affecting auditors’ judgments and decisions about fraud – auditors’ attention to fraud during evidence evaluation. Additionally, my study introduces prospective memory theory to the audit literature, highlighting the fact that auditors’ task of considering fraud necessarily changes from a primary task during planning to a secondary or prospective memory task during evidence evaluation.