Auditors' Skeptical Characteristics and Their Relationship to Skeptical Judgments and Decisions

The purpose of this exploratory study is to examine the relationship between auditors’ skeptical characteristics and skeptical judgments and decisions. Despite the importance of auditor skepticism, as recognized by auditing standards, regulators, and practice, there is a lack of consensus and empirical data on the identification of auditor’s skeptical characteristics, how they are measured and the extent to which skeptical characteristics map with auditors’ skeptical judgments and decisions. Gaining insight on these issues has important implications for auditor recruitment and training, guidance to provide in audit tools, and future research. Three widely recognized skeptical characteristics from the psychology and auditing literatures are examined: (1) interpersonal trust; (2) suspension of judgment; and (3) locus of control. Furthermore, a comprehensive professional skepticism scale developed for the field of auditing is also considered. Finally, to examine the effect of client risks, the influence of control environment strength on the relationship between skeptical characteristics and auditors’ judgments and decisions is examined. An experimental study is conducted to address these issues involving a sample of 376 auditors from offices of the Big Four auditing firms in the Netherlands with experience ranging from staff to partner. The results show that the strength of the relationship between the alternative skeptical characteristics and skeptical judgments and decisions varies significantly. Overall, interpersonal trust displays the highest significance in predicting skeptical judgments and decisions. However, the relationship between auditors’ skeptical characteristics and skeptical judgments and decisions appears to be dependent on the strength of the control environment