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Unformatted text preview: ity), then the auditor will either require more evidence to offset the
lower weighting on the evidence, or require evidence be gathered from a different source
that is more credible than management. Both options attempt to achieve at least the same
level of conﬁdence as when management is seen as a credible evidential source (i.e., has
A similar theme runs through SAS No. 99. As the RMM due to fraud increases, the
standard calls for adjustments to the nature, timing, and extent of audit procedures (SAS
No. 99, para. 48). SAS No. 99 discusses a dual effect on professional skepticism, both in
terms of the overall attitude toward the RMM (captured in H1), and also through the
questioning of evidence and information obtained from the client. SAS No. 99 appears to
suggest that the auditor speciﬁcally adjust skepticism toward the evidence obtained. Paragraph 52 discusses in some detail the impact on the nature (we call persuasiveness), timing,
and extent of audit procedures.
Given that the management integrity assessment is a signiﬁcant consideration in the
planning phase, we explore whether management integrity has a dual effect on audit testing
both through its impact on the auditor’s assessment of RMM, and through its impact on
the credibility of evidence supplied by management. We expect that as the assessment of Auditing: A Journal of Practice & Theory, November 2005 54 Kizirian, Mayhew, and Sneathen management integrity decreases, we should see the auditor react by placing a lower weighting on evidence provided by management. All things equal, we should see the auditor
respond to low management integrity by increasing the extent of evidence collected, collecting more persuasive evidence from sources other than management, and replacing interim data with year-end data that more reliably reﬂects conditions as of the balance sheet
date. As such, we test the following hypotheses:
H2p: The auditor’s assessment of management integrity is inversely related to
the persuasiveness of audit procedures incremental to the risk of material
misstatement assessment. H2t: The auditor’s assessment of m...
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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