The results of this study are important for audit firms to consider when designing their group discussions, required by US and International auditing standards, regarding the susceptibility of their clients’ financial statements to fraud and ways these potential frauds could be enacted.  The study’s findings suggest that interacting groups with brainstorming guidelines and pre-mortem groups (i.e., where participants engage in a backward-thinking process, in which they envision the event of an undiscovered fraud emerging after the financial statement audit period) generate the highest quantity and quality of fraud ideas.  The study’s results are important for audit firms to consider, since the quantity and quality of ideas generated in the fraud group discussions are key characteristics of the output of such discussions.  Specifically, the quantity of ideas is important because the “mere mention” of ideas during the meeting is likely to elevate auditors’ overall skepticism and alert them to a variety of potential frauds they could encounter. The quality of ideas is an inherently important output of the discussion, and the rarity/uniqueness of ideas (a dimension of quality in the study) is important because audit team members are likely to already be aware of obvious potential frauds, and so the group discussion could be best used to construct more “out of the box” frauds that are less likely to be known.

Trotman, K.T., Simnett, R., and A. Khalifa. 2009. Impact of the Type of Audit Team Discussions on Auditors’ Generation of Material Frauds. Contemporary Accounting Research. 26(4): 1115 – 1142.