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| Author: | Ohta, Y. |
| Title: | On the conditions under which audit risk increases with information |
| Journal: | European Accounting Review
2008 : VOL. 17:3, p. 559-585 |
| Index terms: | auditing risk fraud information models |
| Language: | eng |
| Abstract: | In the literature on strategic auditing, it has been reported that the probability of audit failure (or 'audit risk', hereafter as: a-r.) may increase when the auditor gets information (hereafter as: info). In this paper, simple models are provided for analyzing the general tendencies of exogenous parameters for such cases. It is shown that a-r. increases with more info. if the auditee has a sufficiently strong incentive to commit fraud (as: c-frd). If the auditee is penalized by auditor rejection even without c-frd., the detection risk increases with more info. In this case, if the auditor has a sufficiently strong incentive to avoid false rejection, a-r. increases with more information. |
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