Business Administration, Management, and Operations Commons^™

Evaluating The Intentionality Of Identified Misstatements: How Perspective Can Help Auditors In Distinguishing Errors From Fraud, Erin L. Hamilton

Theses and Dissertations

According to Auditing Standard No. 14, fraud is an intentional act. Thus, when a misstatement is identified during the audit, auditors should consider whether the misstatement might have been caused intentionally (PCAOB 2010a). The objective of the present study is to investigate whether considering the perspective of the manager responsible for a misstatement's occurrence impacts auditors' beliefs concerning the misstatement's intentionality. Using an experiment with 82 audit manager and senior manager participants, I find that auditors who actively consider the perspective of the manager who caused a misstatement assess the likelihood that the misstatement is intentional higher when the circumstances …