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http://hdl.handle.net/11718/19418
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DC Field | Value | Language |
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dc.contributor.author | Desai, Naman | |
dc.date.accessioned | 2017-06-21T12:01:11Z | |
dc.date.available | 2017-06-21T12:01:11Z | |
dc.date.issued | 2016 | |
dc.identifier.citation | Desai N. (2016). Impact of company level information on auditor conservatism. Review of Accounting and Finance, 15(4), 518-532. | en_US |
dc.identifier.uri | http://hdl.handle.net/11718/19418 | |
dc.description.abstract | Purpose - Auditors tend to focus more on income-increasing items compared to income-decreasing items because they are trained to be conservative and also because the risk of litigation is significantly higher for failing to detect material income-increasing items compared to material income-decreasing items. Auditors- consideration of transaction-level items is also affected by their evaluation of company-level information. Therefore, this study aims to examine how the interaction between company-level information and sign of the material items affects auditors- evaluation of income-increasing and income-decreasing items. Design/methodology/approach - A three-treatment between-subjects experiment was conducted to investigate the research questions. Findings - The results indicate that in the absence of company-level information, auditors intuitively associate a higher risk and audit effort to income-increasing items. When the company-level information indicates that management is under pressure to inflate earnings, auditors- conservatism associated with income-increasing items gets amplified. This leads to an increase in the difference in assessed risk and audit effort between income-increasing and income-decreasing items. However, when the company-level information indicates that management is not under pressure to inflate earnings, there are no significant differences in assessed risk and audit effort between income-increasing and income-decreasing items. These results indicate that auditor conservatism is affected by company-level information. Originality/value - The findings indicate how an analysis of company-level information (as prescribed by auditing standards) and inherent auditor conservatism could potentially affect audit procedures and have important implications for the audit profession. | en_US |
dc.language.iso | en_US | en_US |
dc.publisher | Emerald Group Publishing Ltd. | en_US |
dc.subject | Audit risk | en_US |
dc.subject | Company level information | en_US |
dc.subject | Conservatism | en_US |
dc.subject | Income-decreasing | en_US |
dc.subject | Income-increasing | en_US |
dc.title | Impact of company level information on auditor conservatism | en_US |
dc.type | Article | en_US |
Appears in Collections: | Journal Articles |
Files in This Item:
File | Description | Size | Format | |
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Impact of company level information on auditor conservatism_Naman Desai_RAF_2016.pdf Restricted Access | 226.83 kB | Adobe PDF | View/Open Request a copy |
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