The influence of contrary information and mitigating factors on audit opinion decisions on bankrupt companies
Article Abstract:
A study was conducted to examine the impact of contrary information and mitigating factors on audit opinion decisions regarding companies on the verge of bankruptcy. Contrary information is defined as information challenging the further existence of the client while mitigating factors serve to offset and therefore lessen the impact of contrary information. Findings revealed a significant correlation between the going-concern opinion decisions of auditors in the face of bankruptcy and the likelihood of bankruptcy as well as an audit-report lag variable. It was also revealed that the going-concern opinion is highly correlated with payment and covenant defaults but not with cured default. The opinion was also correlated with a bankruptcy lag variable and very negative news reports before the audit-report date. Lastly, corporate size was also found to affect auditors' opinions.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1997
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The effects of time pressure and audit program structure on audit performance
Article Abstract:
The effects of time pressure and the structure of an audit on auditors' performance were studied. An experiment involving 179 staff auditors from a public accounting firm was conducted. Participants were tested for their command of details of an inventory within the environment of a partial year-end audit program, a task analogous to auditors' tasks preformed under time pressure. The experiment involved two different audit programs and four levels of time pressure. Research results revealed that time pressure and audit structure affected audit effectiveness. Increased time pressure reduced the effectiveness of an audit, and it had a greater effect in an unstructured audit environment. Audit consistency was higher for a structured audit environment at all time-pressure levels.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1990
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The influence of time pressure and accountability on auditors' processing of nondiagnostic information
Article Abstract:
An extension of Hackenbrack's (1992) study was made to further research on the impact on auditor judgment of nondiagnostic information. Hackenbrack demonstrated that the fraud-risk assessments of auditors who were presented with a combination of diagnostic and nondiagnostic information were less radical than those of auditors given diagnostic information only. The present study examined if auditors manifest the same dilution effect when exposed to time pressure and accountability. Findings revealed that time pressure only minimized but did not eradicate the dilution effect. Moreover, accountability did not significantly alter the dilution effect. Implications and recommendations for further studies are discussed.
Publication Name: Journal of Accounting Research
Subject: Business
ISSN: 0021-8456
Year: 1997
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