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E 1 2 or 3 our untabled inferences are unchanged from

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Unformatted text preview: using RMM. Mock and Wright (1993, 1999) use the Number of Tests conducted (NofTests) to measure the nature of evidence, whereas, we attempt to measure the persuasiveness of evidence. When we use NofTests we obtain similar results to those presented in Table 3 in tests of H2p, MI is marginally significant ( 0.626, p 0.107). It appears that NofTests is a better proxy for the extent of procedures rather than the persuasiveness of evidence. In support of this conjecture, there is a high correlation between the NofTests and the extent measures (0.73, p 0.001). We also use a cumulative independence score as a measure for persuasiveness rather than the average. This approach produces a measure of persuasiveness that captures both the number of procedures and the independence of each procedure (i.e., 1, 2, or 3). Our untabled inferences are unchanged from those reported in Table 3 for tests of H2p. When we change DIFF from an indicator variable to the total documented audit differences scaled by total revenue, the untabled results are consistent with those presented in Table 4. Further, when IR and CR are used in place of RMM as a control with the scaled DIFF as a dependent variable, the results continue to be consistent with Table 4. All but one of the misstatements are overstatements, so our results reflect the association between the management integrity assessment and overstatements. In our hypotheses development, we discussed SAS No. 99 on fraud and linked the MI assessment to the management attitude aspect of the fraud risk. The audit firm included a fraud risk assessment for the audits we examine. Fraud risk is an indicator variable coded 1 if high fraud risk and 0 if low fraud risk. We included this measure in our analysis to Auditing: A Journal of Practice & Theory, November 2005 64 Kizirian, Mayhew, and Sneathen TABLE 4 Logistic Regression Analysis Tests of H3: DIFF 0 *MI 1 2 *RMM *PYERR 5 DIFF 0 *MI 1 6 2 *PYERR *TIMING or 6 *REVENUE *PUBLIC *RMM 5 9 3 3 *TENURE *INDUSTRY 7 *REVENUE *PUBLIC 4 4 e *TENURE *INDUSTRY 7 *PER...
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