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Unformatted text preview: SUASIVENESS 10 (5) *EXTENT 8 e (6)
Dependent Variable Independent Variables
and Expected Signs DIFF
REVENUE ? TENURE
INDUSTRY ? PERSUASIVENESS ? TIMING ? EXTENT ? 4.917
0.074 Dependent variable DIFF equals 1 when the auditor discovered an audit difference during the evidential process
and 0 otherwise. All other variables are deﬁned in Table 3.
Statistical signiﬁcance (p-values) for parameter estimates are for one-tailed tests with directional expectations
and two-tailed tests where there is no directional expectation. investigate whether it impacted the signiﬁcance of MI. As expected MI is negatively cor– 0.66, p .001). When fraud risk is added to our models, it
related with fraud risk (r
does not have a signiﬁcant effect on our inferences concerning MI. Fraud risk itself is not
signiﬁcant in any of the models. SAS No. 99 was not in effect during the audits we examine.
Future research should revisit the impact on fraud risk assessments on audit planning postSAS No. 99. Auditing: A Journal of Practice & Theory, November 2005 The Impact of Management Integrity on Audit Planning and Evidence 65 SUMMARY AND CONCLUSIONS
In light of recent management-induced business failures (e.g., Enron) and the SarbanesOxley-related Section 404 requirement that auditors certify internal controls, the importance
of recognizing and considering the integrity of client management has taken on renewed
importance. This study examines the inﬂuence of the auditor’s assessment of management
integrity on preliminary risk assessments and the allocation of audit effort. Our results
suggest that clients with higher assessed levels of integrity have lower preliminary risk
assessments, but prior-year error better explains risk and planning assessments than the
management integrity assessmen...
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- Spring '10