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| Author: | Beaulieu, P. R. |
| Title: | The Effects of Judgments of New Clients Integrity upon Risk Judgments, Audit Evidence, and Fees |
| Journal: | Auditing: A Journal of Practice and Theory
2001 : SEP, VOL. 20:2, p. 85-100 |
| Index terms: | RISK AUDITING CLIENTS |
| Language: | eng |
| Abstract: | Sixty-three Canadian audit partners were provided a case about a potential audit client for which information about the client's CFO indicated either high or low integrity. For example, the CFO was either respected or not respected in the local business community. After reading the case, participants were asked to judge business and combined risk, and to recommend audit extent and fees. They were later asked to judge the integrity of the CFO and, as expected, lower integrity judgments were associated with higher levels of both business and combined risk. Higher risk judgments were related to greater audit evidence extent and fees. The key finding is that there are situations when auditors are willing to compensate for questionable integrity by increasing audit extent. |
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