When an auditor's effort is not observable, auditor liability becomes an important mechanism for motivating the auditor to exert an appropriate level of audit effort. However, while the presence of legal liability helps to preserve the value of an audit to investors, some aspects of the...

The Sarbanes-Oxley Act (SOX) mandates managers and auditors to assess the effectiveness of internal controls over financial reporting. Our study investigates two methods that organizations commonly use to document their business processes – descriptive narrative (hereafter, textual) and...

This article presents information related to issues discussed at the 1998 Audit Symposium. Presenting their views on traditional audit, experts commented that they didn't really know what opportunities existed in the assurance market but some early indications showed that in fact the market was...

The article informs that in conducting an audit, the auditor is required to express an opinion concerning a client's financial statements. The construction of an audit plan or the evaluation of a completed or partially completed audit program usually requires the auditor to make a large number...

Describes a set of tests designed to evaluate the performance of CAPEX, an expert system designed to generate substantive audit program plans for the revenue/receivable/receipts cycle of manufacturing, retailing, and banking firms. Better performance of CAPEX in comparison with human experts;...

An effective audit plan starts with understanding of the client's business risks. Though business risk assessment is a required component of audit risk assessment (ISA 315), there is little guidance regarding the best format for documenting business risks to support audit risk assessment; as a...

By analysing auditors' SOX 404 reports from 2004 to 2011 we find that after 2006 Big 4 reporting of both information technology control weaknesses (ITWs) and non-ITWs in reports with ITWs decreased significantly. This change appears to reflect Big 4 reporting practices in response to a change in...

Experimental studies concerning fraud (or “red flag”) checklists often are interpreted as providing evidence that checklists are dysfunctional because their use yields results inferior to unaided judgments (Hogan et al. 2008). However, some of the criticisms leveled against checklists are...