Learning from others’ deficiencies: How group affiliation and election basis jointly affect auditors’ effective use of inspection feedback

Hetrick, Kamber Vittori

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https://hdl.handle.net/2142/101165 Copy

Description

Title

Learning from others’ deficiencies: How group affiliation and election basis jointly affect auditors’ effective use of inspection feedback

Author(s)

Hetrick, Kamber Vittori

Issue Date

2018-04-16

Director of Research (if dissertation) or Advisor (if thesis)

Bauer, Tim D.

Doctoral Committee Chair(s)

Peecher, Mark E.

Committee Member(s)

• Hobson, Jessen L.
• Trotman, Ken T.
• Laurent, Sean

Department of Study

Accountancy

Discipline

Accountancy

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Date of Ingest

2018-09-04T20:34:05Z

Keyword(s)

• risk-based selection
• audit inspections
• group affiliation
• auditor behavior
• feedback

Abstract

Both external and internal inspectors typically select audit engagements to inspect using a risk-based approach (i.e. they pick those they predict are more likely to have deficiencies). While reducing the amount of resources needed to find audit deficiencies, this approach can perversely influence the behavior of non-inspected auditors who read the inspection feedback. Using social identity theory and attribution theory, I predict that auditors’ effective use of inspection feedback depends on whose engagements are inspected (more vs. less closely affiliated auditors) and how the engagements are selected (risk vs. random basis). I predict and find that auditors identify more strongly with the inspected auditors when inspections are risk-based or pertain to more closely affiliated auditors (e.g., same office). This stronger identification triggers defensive attributions, decreasing the perceived value of the report, and reducing the degree to which they employ corrective action that addresses inspector feedback in their own audits. Random selection is more neutral in nature, reducing identification and improving incorporation of inspection feedback, but only when the feedback is for less closely affiliated auditors. Implications for auditors, audit firms, and regulators are discussed.

Graduation Semester

2018-05

Type of Resource

text

Permalink

http://hdl.handle.net/2142/101165

Copyright and License Information

Copyright 2018 Kamber Hetrick

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