How do Audit Committees Support Audit Engagement Teams and Encourage Professional Skepticism? A Survey and Experimental Evidence

We explore how audit committees (ACs) support audit engagement teams and whether AC support can improve auditors’ professional skepticism. We first survey audit practitioners and find that AC support is multidimensional, varies between engagements, and often is not communicated to the entire engagement team. We then experimentally investigate whether the explicit communication of AC support to the entire engagement team (by the partner vs. directly from the AC chair) impacts the skepticism of auditors. AC support increases skeptical actions when management attitudes towards the engagement team are poor. However, direct communication of support by the AC chair does not increase skepticism relative to when the partner conveys AC support. Our findings highlight the importance of AC support in relation to skepticism and the crucial role partners can play in conveying AC support to their entire engagement team