The proxy utilized for the persuasiveness of audit

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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 persuasiveness. 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...
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