Read the full-text of this article for free

Title: Evaluation Of The Validity Of Management Representations As Audit Evidence

Authors: Diane H. Roberts

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Auditors' fraud risk assessment includes detection of deceptive client representations. Prior psychology deception detection research found low accuracy but high confidence that may lead to inappropriate judgments. In an audit context, subjects were more accurate than chance but had substantial errors. Accuracy was greater for overstatements than for understatements. The warning of low evaluated management integrity aided detection and significantly increased assessed fraud likelihood. Confidence was greater with audio tape cues than with transcript-only; however, accuracy was not significantly greater. The proliferation of Internet fraud makes knowledge about the ability to detect deception with only transcript cues important.

Keywords: Fraud risk assessment; deception detection; management representations; audit evidence; accuracy.

DOI: 10.1504/JBM.1998.141047

Journal of Business and Management, 1998 Vol.6 No.1, pp.8 - 21

Published online: 05 Sep 2024 *