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    The Effect of Audit Inquiries on the Ability to Detect...
    research summary posted May 7, 2012 by The Auditing Section, last edited May 25, 2012, tagged 06.0 Risk and Risk Management, Including Fraud Risk, 06.01 Fraud Risk Assessment, 08.0 Auditing Procedures – Nature, Timing and Extent, 08.04 Auditors’ Professional Skepticism 
    The Effect of Audit Inquiries on the Ability to Detect Financial Misrepresentations
    Practical Implications:

    The results of this study show that inquiry, including repeating questions and providing deception training do not increase the accuracy of those observing interviews.  However, the participants were less likely to believe interviewees when they observed the open ended question inquiry than when they observed the yes/no questions only. Therefore, there is some evidence that by observing an inquiry, professional skepticism is increased.       

    The authors recognize that their results may not generalize to experienced auditors, who may have general or specialized knowledge and abilities that enable them to detect deception better than undergraduate accounting students and recommend further research on experienced auditors.  


    Lee, C. C. and Welker, R. B. 2007. The effect of audit inquiries on the ability to detect financial misrepresentations. Behavioral Research in Accounting 19 (1): 161-178.

    fraudulent financial reporting, audit inquiry, deception detection, deception training
    Purpose of the Study:

    There has been a recent emphasis placed on inquiries for fraud risk assessments. The present study assesses how well deception can be detected during audit inquiries.  Due to the nature of an audit inquiry, the authors predict that the inquiries will create an environment where deception is more difficult to carry out and is therefore easier to catch. Using two experiments, the authors examine whether a student observing an interview (as opposed to performing the interview) is effective at detecting deception and whether training increases the ability to detect deception. 

    Design/Method/ Approach:

    The authors performed two experiments using undergraduate accounting students.  The experiment involved a simulated interview where an interviewer (former auditor and CPA) asked an interviewee (MBA student) questions and observers (accounting students) reviewed a video of the interviews and determined whether the interviewee was telling the truth or lying.  Observers were exposed to one of three sections of the interview: just the representations of the interviewee (just yes or no questions), the representations and the inquiry (yes/no and open ended questions), or the entire interview (including repeated questions). 

    A second experiment was conducted which was consistent with the first experiment. A new set of undergraduate accounting students were observers of the same interviews used in experiment one. However, half of the observers received training and half did not. 

    • Students are not any better at detecting deception by observing an interview than random chance.
    • Those who observed the inquiry (open ended questions) are no better at detecting deception than those who just observed the representations (yes/no questions).
    • Those who observed the entire interview with repeated questions are no better at detecting deception than those who observed the inquiry without repeated questions.
    • Those who received training were not any better at detecting deception than those who did not receive training.
    Risk & Risk Management - Including Fraud Risk, Auditing Procedures - Nature - Timing and Extent
    Fraud Risk Assessment, Auditors’ Professional Skepticism
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