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A classroom example of the deleterious effects of auditor predictability

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  • Spires, Eric E.
  • Ward, C.J.

Abstract

If an auditor employs the same testing strategy (e.g., type of evidence, sample size, scope, selection method) year after year, or otherwise inadvertently discloses information about the audit plan, the auditee can predict auditor behavior on the current audit. The instructional exercise described in this note illustrates the deleterious effects on audit effectiveness of this predictability. Numerical examples and student decisions are used to show that the probability that the auditor will detect intentional misstatements (fraud) may be reduced dramatically if the auditor does not recognize the strategic aspects of auditing.

Suggested Citation

  • Spires, Eric E. & Ward, C.J., 2015. "A classroom example of the deleterious effects of auditor predictability," Journal of Accounting Education, Elsevier, vol. 33(1), pages 36-49.
    • Handle: RePEc:eee:joaced:v:33:y:2015:i:1:p:36-49
    DOI: 10.1016/j.jaccedu.2014.10.002
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    References listed on IDEAS

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    1. Shibano, T, 1990. "Assessing Audit Risk From Errors And Irregularities," Journal of Accounting Research, Wiley Blackwell, vol. 28, pages 110-140.
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    2. Ozlanski, Michael E. & Seymoure, Suzanne, 2021. "Conducting a physical inventory of McIntyre Organics: Bringing real-life experiences to the classroom," Journal of Accounting Education, Elsevier, vol. 56(C).

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