The Effects of Auditor Rotation, Professional Skepticism, and Interactions with Managers on Audit Quality

• 成果类型: Article
• 署名作者: Bowlin, Kendall O.; Hobson, Jessen L.; Piercey, M. David
• 署名单位: University of Mississippi; University of Illinois System; University of Illinois Urbana-Champaign; University of Massachusetts System; University of Massachusetts Amherst
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51032
• 发表日期: 2015
• 页码: 1363-1393
• 关键词: partner tenure; firm tenure; MODEL; probability; earnings; determinants; reverse; ability; BIAS

摘要

We examine whether the effect of mandatory auditor rotation on audit quality depends on the mental frame auditors adopt in evaluating management representations. In practice, auditors can alternately frame their assessments of management representations in terms of their potential dishonesty (what we term skepticism) or potential honesty. Using psychology theory and a laboratory experiment, we predict and find that mandatory rotation improves audit quality when an auditor takes an honesty frame, but that this effect reverses when an auditor takes a skeptical frame. Thus, the benefit of using a skeptical frame occurs when auditors do not rotate, but requiring rotation can reduce audit effort for auditors using a skeptical frame. An implication of our study is that focusing auditors on a skeptical assessment frame rather than mandating auditor rotation may be a less costly way to reduce low-effort audits and aggressive reporting.