Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    Auditors’ Risk Assessments: The Effects of Elicitation A...
    research summary posted February 16, 2017 by Jennifer M Mueller-Phillips, tagged 06.0 Risk and Risk Management, Including Fraud Risk, 06.05 Assessing Risk of Material Misstatement 
    Auditors’ Risk Assessments: The Effects of Elicitation Approach and Assertion Framing
    Practical Implications:

    These results imply that risk assessment approach can have a significant effect on the assessed risk of material misstatement and, thus, on audit program decisions that influence audit effectiveness and efficiency. The existence of assertion framing effects may directly affect the level of professional skepticism and audit effectiveness and efficiency. Both studies indicate that when belief-based assessments are transformed into probabilities, the difference from the direct probability assessments of risk is not significant; thus, obtaining belief-based assessments might make obtaining probability assessments redundant and also has the advantage of providing explicit assessments of ambiguity. 


    Mock, T. J. and H. Fukukawa. 2016. Auditors’ Risk Assessments: The Effects of Elicitation Approach and Assertion Framing. Behavioral Research in Accounting 28 (2): 75 – 84. 

    auditors’ risk assessment, belief functions, probability, assertion framing, and skepticism.
    Purpose of the Study:

    The primary purpose of this experimental study is to replicate a previous study conducted by the authors, who examine the effects of “risk assessment elicitation approach” and “assertion framing” on auditors’ risk assessments. They find that auditors’ risk assessments differ in some important ways and that auditors’ risk assessments are influenced by assertion framing. However, the generalizability of these findings may be limited due to the use of Japanese practitioners as subjects. This study investigates U.S. practitioners in an attempt to corroborate the previous findings.

                The study focuses on two important factors that are found to affect auditors’ risk assessment judgments in the prior study: the risk assessment elicitation approach and the framing of financial statement assertions being audited. 

    Design/Method/ Approach:

    This study is an experimental replication of Fukukawa and Mock 2011. The risk assessment elicitation approach is manipulated by using scales based on either probability theory or the theory of belief functions. 

    • The authors find that both experimental results show significant “risk assessment approach” effects in the expected directions.
    • The authors find considerable evidence of significant “assertion framing” effects.
    • The authors find that the two risk elicitation approaches result in significantly different risk assessments.
    • The authors find that auditors’ assessed risks are higher; they seem to be more risk-sensitive and exhibit a higher level of professional skepticism when an assertion is stated in a negative way than in a positive way.
    • The authors find that while probability-based risk assessments are higher than belief-based assessments and lower than plausibility assessments, the differences between the two approaches are not significant when the belief-based assessments are transformed into probabilities using a newly proposed method. 
    Risk & Risk Management - Including Fraud Risk
    Assessing Risk of Material Misstatement