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The purpose of this paper is to investigate whether the use of a questionnaire or a narrative documentation format will impact an auditor's performance in identifying internal control design weaknesses.

A field experiment approach with a sample of 73 auditors of varying experience.

It is found that auditors who completed an internal control questionnaire (ICQ) correctly identified more internal control design weaknesses than auditors who prepared a narrative. Internal control evaluation experience moderated this effect. The results imply that the questionnaire documentation format stimulates an auditor's existing internal control knowledge, thereby enhancing performance when identifying internal control design weaknesses.

These findings suggest that there are important benefits to auditors that may be lost if they choose not to use questionnaires for internal control evaluation. These findings have important implications for practitioners and standard setters, who appear to be gravitating away from the use of standardized ICQs.

The results of this study may assist organizations that are considering what form their internal control documentation should take in response to the Sarbanes‐Oxley Act of 2002.

The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no direct experience with fraud; thus, research that investigates the potential effect of indirect experience through training is vitally important to fraud detection and audit quality. A total of 369 experienced auditors completed a complex audit simulation task that involved 15 seeded fraud risk red flags. A total of 143 auditors participated in a 30-minute training session focused specifically on fraud risk, while the remaining 226 auditors learned about general internal control risk during this time block. The results indicate that auditors with fraud training identified significantly more red flags and obtained greater knowledge about fraud risk than auditors who did not receive the training. Considering that the fraud training consumed only 30 minutes out of a 64-hour training session, the findings suggest that even modest exposure to fraud training is quite effective.

Part‐list interference occurs when reading a few items from a previously viewed list interferes with recall of the remaining items. The purpose of this study is to examine if the review of an incomplete flowchart, following the review of a complete narrative, interferes with auditors’ recall and evaluation of internal control information. The potential interaction between auditors’ internal control knowledge and the extent of part‐list interference is also investigated. The results indicate there was a significant interaction between knowledge and part‐list interference, suggesting that interference related to an incomplete flowchart occurred primarily with less knowledgeable auditors. Therefore, higher levels of knowledge may reduce interference when recall cues are organized schematically, as found in flowcharts.

The purpose of this paper is to examine differences in managers' and employees' attitudes about fraud across different cultures, provide some theories as to why these differences exist, give some recent examples of cultural differences in ethical perceptions from practice, make recommendations as to how companies can address this issue and make improvements to their anti‐fraud programs based on the country and culture in which they operate, and suggest some opportunities for future research.

The paper takes the form of a literature review.

A great deal of future research is needed to examine the effects of culture on the critical elements of managements' antifraud programs and controls that may be most effective in combating corruption, including the whistleblower hotline, internal audit, surprise audits, management review of internal controls, rewards for whistleblowers, and mandatory job rotation.

This is one of the first papers reviewing the literature on cross‐cultural fraud and identifying opportunities for future research.

The purpose of this paper is to investigate the effect of performance feedback and client importance on auditors' self‐ and public‐focused ethical judgments.

An experiment is conducted in which 71 auditors are assigned to one of four conditions created by fully crossing performance feedback (positive and negative) and client importance (high and low).

Consistent with expectations, auditors who receive positive (negative) feedback make more (less) ethical judgments in a self‐focused task (a judgment that produces consequences that are relevant for the auditor). Auditors also make more (less) ethical judgments in a public‐focused task (a judgment that has consequences for both the auditor and the public) when auditing a less (more) important client. Finally, auditors who receive positive feedback and audit a less important client make more ethical judgments in both tasks than all other auditors.

These findings suggest that auditors are susceptible to pressures from negative feedback and client importance, even in situations where their decisions will have public consequences, despite regulatory changes intended to enhance audit quality.

This is the first paper that provides evidence that different sources of pressure (performance feedback and client importance) differentially affect ethical tasks differing in decision consequences (self‐ and public‐focused). Such evidence suggests the importance of matching pressure source to ethical task type.