Cognitive dissonance and auditor professional skepticism
ISSN: 0268-6902
Article publication date: 9 January 2024
Issue publication date: 15 January 2024
Abstract
Purpose
This study aims to demonstrate how pressures (incentives) in the audit environment can lower audit quality because of a breakdown between professionally skeptical (PS) judgment (risk assessment) and PS action (testing).
Design/methodology/approach
The authors used a Qualtrics-based experiment with attitude change as a proxy measure of cognitive dissonance (CD). The authors analyze the results using a one-way independent between-group ANOVA with post hoc tests and t-tests.
Findings
The authors find that auditors experience CD when they fail to take appropriate high PS action (audit tests) that are in line with high PS judgment (risk assessments). The motivational force to reduce CD drives auditors to revise their assessments upward (rank higher), lower diagnostic audit tests (PS actions) and lower risk assessments (PS judgments). This leads to lower overall professional skepticism, and hence lower audit quality.
Originality/value
This investigation provides an empirical investigation of Nelson’s (2009) model of professional skepticism and demonstrates a specific mechanism for how incentives in the audit environment lower audit quality. Based on the findings, treatments to enhance audit quality can benefit by strengthening the critical link between PS judgments (risk assessments) and PS actions (audit tests).
Keywords
Acknowledgements
The authors thank Robert Libby, Dan Sunderland and the workshop participants at the AAA/Deloitte/J. Michael Cook Doctoral Consortium (Texas) for their insightful comments. The authors thank the anonymous reviewers, participants and Cassandra Estep for her discussion at the AAA Auditing Section Midyear Meeting (Portland); the anonymous reviewers, participants and Alyssa Ong for her discussion at the AAA Fraud Section Midyear Meeting; and the reviewers and participants at the Florida Behavioral Research Symposium (Boca Raton). Ruwan Adikaram gratefully acknowledges the invaluable guidance from his dissertation committee at Florida Atlantic University: James Wainberg, George Young and Robert Pinsker. Ruwan Adikaram gratefully acknowledges financial support from the Rosalie Premuroso Scholarship Fund, the Clyde C. Looknanan Scholarship, the Florida Atlantic University (FAU) College of Business Dean’s Research Grant and the FAU Graduate College Dissertation Year Award.
Citation
Adikaram, R. and Higgs, J. (2024), "Cognitive dissonance and auditor professional skepticism", Managerial Auditing Journal, Vol. 39 No. 1, pp. 71-110. https://doi.org/10.1108/MAJ-08-2022-3653
Publisher
:Emerald Publishing Limited
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