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Unformatted text preview: archival data from 60 audits conducted by a U.S. Big 4 accounting
ﬁrm to examine the association between the external auditor’s assessment of management integrity, and the auditor’s assessment of risk of material misstatement Timothy G. Kizirian is a Professor at California State University, Chico, Brian W. Mayhew
is an Assistant Professor the University of Wisconsin–Madison, and L. Dwight Sneathen,
Jr. is an Assistant Professor at Georgia Southern University.
We appreciate comments from the referees, Bill Messier, Kathy Hurtt, and Larry Rittenberg. We thank the datagranting ﬁrm for its generous provision of data. Funding from The University of Arizona Foundation and Department of Accounting is gratefully acknowledged. Submitted: December 2003
Accepted: June 2005 49 50 Kizirian, Mayhew, and Sneathen (RMM), audit planning, and the discovery of ﬁnancial statement misstatements. Prior archival research provides weak support for the linkage between risk assessments and auditrelated judgments (Mock and Wright 1993, 1999). Our study provides a stronger test than
prior studies. First, we use data taken directly from the working papers rather than through
questionnaires. Second, we employ a key internal control characteristic (i.e., management
integrity). Last, we focus on a combined measure of audit risk.1 We also go a step further
than prior archival research by linking the management integrity assessment through the
audit process to the discovery of misstatements.
Experimental research generally indicates a linkage between risk assessments and audit
planning, suggesting that auditors adjust their decisions based on evidence concerning management integrity (Beaulieu 2001; Ayers and Kaplan 1998; Schaub 1996). Our paper extends this research to an archival setting to examine the impact of auditor assessments of
management integrity on audit planning. We examine this association in a ﬁeld setting to
get feedback on the relative importance of management integrity assessments in ﬁeld-based
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This note was uploaded on 11/11/2010 for the course MIS BMBM31101 taught by Professor Ms.sara during the Spring '10 term at Asian Institute of Management.
- Spring '10