Jared Eutsler, A. S. Fleming, D. K. Holderness, Megan M. Jones
{"title":"Increasing Client Fraud Risk Disclosure with Minimization Techniques","authors":"Jared Eutsler, A. S. Fleming, D. K. Holderness, Megan M. Jones","doi":"10.2308/horizons-2022-122","DOIUrl":null,"url":null,"abstract":"\n Auditing standards require auditors to conduct fraud inquiries as part of their risk assessment process. During fraud inquiries, auditors frequently ask client personnel directly about “fraud, alleged fraud, or suspected fraud,” using standard language taken from AS 2110. However, guidance from the Center for Audit Quality (CAQ) suggests that avoiding the word “fraud” results in greater disclosure regarding fraud risk. Although untested, the CAQ’s conjecture is supported by literature in psychology and criminology, which suggests that minimizing the seriousness of the offense (i.e., minimization) increases disclosure. This study examines two minimization strategies. The first involves replacing the word “fraud” with “questionable behavior.” The second employs social comparison to increase the perceived frequency that clients report misconduct to auditors. Experimental results suggest that either strategy increases client reporting intentions relative to a control condition using the language prescribed by AS 2110. Our findings may help auditors conduct more effective fraud inquiries.\n Data Availability: Data are available from the authors.\n JEL Classifications: M42; M48.","PeriodicalId":51419,"journal":{"name":"Accounting Horizons","volume":null,"pages":null},"PeriodicalIF":2.2000,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounting Horizons","FirstCategoryId":"91","ListUrlMain":"https://doi.org/10.2308/horizons-2022-122","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Auditing standards require auditors to conduct fraud inquiries as part of their risk assessment process. During fraud inquiries, auditors frequently ask client personnel directly about “fraud, alleged fraud, or suspected fraud,” using standard language taken from AS 2110. However, guidance from the Center for Audit Quality (CAQ) suggests that avoiding the word “fraud” results in greater disclosure regarding fraud risk. Although untested, the CAQ’s conjecture is supported by literature in psychology and criminology, which suggests that minimizing the seriousness of the offense (i.e., minimization) increases disclosure. This study examines two minimization strategies. The first involves replacing the word “fraud” with “questionable behavior.” The second employs social comparison to increase the perceived frequency that clients report misconduct to auditors. Experimental results suggest that either strategy increases client reporting intentions relative to a control condition using the language prescribed by AS 2110. Our findings may help auditors conduct more effective fraud inquiries.
Data Availability: Data are available from the authors.
JEL Classifications: M42; M48.
期刊介绍:
Accounting Horizons is one of three association-wide journals published by the American Accounting Association AAA. This journal seeks to bridge academic and professional audiences with articles that focus on accounting, broadly defined, and that provide insights pertinent to the accounting profession. The contents of Accounting Horizons, therefore, should interest researchers, educators, practitioners, regulators, and students of accounting.