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Behavioral Research in Auditing 2011 AAA Auditing Doctoral Consortium

Behavioral Research in Auditing 2011 AAA Auditing Doctoral Consortium. E. Michael Bamber J.M. Tull School of Accounting The University of Georgia. Outline. Perspective: 1999 vs. 2010 Publishing BAuR Sources of Research Questions Examples Issues. Publishing Trends - Numbers.

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Behavioral Research in Auditing 2011 AAA Auditing Doctoral Consortium

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  1. Behavioral Research in Auditing2011 AAA Auditing Doctoral Consortium E. Michael Bamber J.M. Tull School of Accounting The University of Georgia

  2. Outline • Perspective: 1999 vs. 2010 • Publishing BAuR • Sources of Research Questions • Examples • Issues

  3. Publishing Trends - Numbers

  4. Publishing Trends - Numbers

  5. Publishing Trends - Topics

  6. Publishing Trends - Topics

  7. Publishing Trends - Topics

  8. Publishing Trends - Topics

  9. Publishing Trends - Topics

  10. Publishing Trends - Topics

  11. Publishing Trends - Topics

  12. A Publishable Paper Provides Insights That Are: • New – Cause belief revision • Interesting – Belief revision is consequential • True • Clear

  13. Deciding on a Topic • Prior literature • Innovations in practice • Psychology theory

  14. Prior Literature • Critically evaluate prior research (Sources: SSRN, Web of Science, AAA and conference websites) • What is the question? • What is the research method? • What is the punchline? • Critique. • What would we still like to know?

  15. Prior Literature • Build a framework • How do the prior papers fit together? • Distill stylized facts: What do we think we know? • Identify research opportunities: What would we like to know? • Rely on others • Existing literature reviews and frameworks

  16. Prior Literature - Examples • Nelson, M. 2009. A model and literature review of professional skepticism in auditing. Auditing: A Journal of Practice and Theory 28(2): 1-34. • Framework for classifying failures in professional skepticism (PS): More important antecedents? • Definition of PS: Presumptive doubt? • Influence of traits and incentives? • “Justifiable inefficiencies” • Incentives to avoid? Interventions to highlight and reward?

  17. Prior Literature - Examples • Peecher, M.E., I. Solomon, and K.T. Trotman. 2010. Improving the quality of financial-statement audits by updating external auditors’ accountabilities. Working paper • Focus less on penalties and more on rewards • Propose 7 reforms, including • Refine the concept of professional skepticism • Improve the content of the audit report • Reward auditors who uncover fraud

  18. Prior Literature - Examples • Hammersley, J.S. 2010. A Review and Model of Auditor Judgments in Fraud-Related Planning Tasks. Working Paper. • Fraud knowledge obtained primarily from training rather than experience • Antecedents to effectively perform fraud related tasks? • Conditions under which auditors do/do not respond to risk?

  19. Innovations in Practice • Carefully read and analyze the practice literature (Sources: AICPA, PCAOB, SEC, Accounting firms) • One-on-one communications • Distill state of practice: Where would the profession like to be? • Identify research opportunities: Improve practice? • E.g., Carpenter, T. 2007. Audit team brainstorming, fraud risk identification, and fraud risk assessment: Implications of SAS No. 99. The Accounting Review 82 (5): 1119-1140. • Messier, W.F., T.M. Kozloski, and N. Kochetova-Kozloski. 2010. An analysis of SEC and PCAOB enforcement actions against engagement quality reviewers. Auditing: A Journal of Practice & Theory 29(2): 232-252.

  20. Innovations in Practice - Examples • PCAOB Standards • New • AS No. 7 Engagement Quality Review • Proposed • Concept Release on Requiring the Engagement Partner to Sign the Audit Report • Future • The Auditors’ Reporting Model (2011 Agenda)

  21. Innovations in Practice - Examples • PCAOB Inspection Reports • Report on Observations of PCAOB Inspectors Related to Audit Risk Areas Affected by the Economic Crisis (Sept. 2010) • Fair value assumptions – failure to test beyond inquiry of management • Fair values – failure to reconcile inconsistencies between management and third party estimates • Revenue recognition - failure to respond to specific risks, including risk of fraud

  22. Psych Theory • Coursework, esp. non-accounting • Read the literature, esp. literature reviews and seminal papers • Citation searches for most recent work • Examples • Wilks, T.J. 2002. Predecisional distortion of evidence as a consequence of real-time audit review. The Accounting Review 77(1):51-72 • Organizational Identity Theory, Small Group Theory, Social Identity Theory, Construal Level Theory

  23. Developing the Topic • Goal: a publishable paper • Consequential belief revision in behavioral auditing will likely require integration of all three: • Prior auditing literature – New – moving literature forward • Practice – Interesting – others care about the topic • Theory – New and Interesting – results are generalizable/consequential

  24. Issues • Publishable topics? • Yes, more than ever (SOX, PCAOB standards agenda & inspection reports) • Journal interest? • Yes, in select journals (TAR, AJPT, CAR, AOS) • Top tier • Participants? • The big issue, cycles • Local vs. national • Students • Lynch, A.L., U.S. Murthy, and T.J. Engle. 2009. Fraud brainstorming using computer-mediated communication: The effects of brainstorming technique and facilitation. The Accounting Review 84 (4): 1209-1232

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