Document Type

Article

Publication Date

10-1-2020

Abstract

Audit associates routinely interact with clients to request explanations and evidence regarding financial statement account balances. Client explanations may be vague or incomplete. We examine whether auditors' assessments of the quality of client explanations and their decision to follow-up with the client are influenced by (1) communication modes that vary in media richness, and (2) a prime that is intended to stimulate skeptical behavior. Media richness refers to the amount of data inherent in the communication mode. We predict that richer communication modes, such as video, can be more distracting than less rich communication modes, such as email. More distracted auditors will assess the quality of the client's response as higher and are less likely to follow-up with the client—potentially impairing audit quality and increasing audit risk. We predict and find that a prime that focuses auditors on the verifiability of the client's response will mitigate this behavior.

Comments

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in AUDITING: A Journal of Practice & Theory, volume 40, issue 1, in 2021 following peer review. The definitive publisher-authenticated version is available online at https://doi.org/10.2308/AJPT-19-038.

Peer Reviewed

1

Copyright

American Accounting Association

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