Unformatted text preview: 4 ﬁrm’s practice ofﬁce that audits predominantly technology-oriented
clients and includes only audits of technology ﬁrms. Prior research on fraud suggests that
high-tech ﬁrms have a higher incidence of fraud than other industries (Beasley et al. 2000).
This suggests that the variance in MI we observe in this study may not be present more
generally in the population. Further, the relationship between management integrity and the
risk of material misstatement may be affected by the nature of the audit personnel making
the assessments. We were unable to identify the individual who made each assessment, and
therefore cannot investigate this issue. The relationships in this study may also be affected
by variation in board of director characteristics or management ownership. Data limitations
prevent us from addressing these issues as well. The proxy utilized for the persuasiveness
of audit testing is unique to this study. Prior research has used the number of audit procedures as a measure of the nature of procedures. We deviate from prior literature in an
attempt to capture the true nature or persuasiveness of procedures. Clearly future research
can attempt to improve on this variable by developing a multidimensional measure of
The results suggest that management integrity impacts auditors’ risk assessment and
the actual discovery of misstatements by the auditor. However, the current paper does not
Auditing: A Journal of Practice & Theory, November 2005 66 Kizirian, Mayhew, and Sneathen attempt to identify the determinants of the auditor’s assessments of management integrity.
Future research can examine these determinants to help better understand what inﬂuences
auditor assessments of integrity. REFERENCES
Amemiya, T. 1985. Advanced Econometrics. Cambridge, MA: Harvard University Press.
American Institute of Certiﬁed Public Accountants (AICPA). 1980. Evidential Matter. Statement on
Auditing Standards No. 31. New York, NY: AICPA.
———. 1983. Audit...
View Full Document
- Spring '10
- RMM, MANAGEMENT INTEGRITY, Audit Planning and Evidence