On the conditions under which audit risk increases with information

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

It has been reported in the literature on strategic auditing that audit risk (the probability of audit failure) may increase when the auditor obtains information, whereas conditions for such cases have not been identified as yet. This paper provides simple models to analyze the general tendencies of exogenous parameters for such cases. The analysis shows that audit risk increases with more information if the auditee has a sufficiently strong incentive to commit fraud. If the auditee is penalized by auditor rejection even when he does not commit fraud, the detection risk increases with more information. In this case, if the auditor has a sufficiently strong incentive to avoid false rejection, audit risk increases with more information.

Original languageEnglish
Pages (from-to)559-585
Number of pages27
JournalEuropean Accounting Review
Volume17
Issue number3
DOIs
Publication statusPublished - 2008

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Audit risk
Auditors
Incentives
Fraud
Audit failure
Strategic auditing

ASJC Scopus subject areas

  • Accounting

Cite this

On the conditions under which audit risk increases with information. / Ohta, Yasuhiro.

In: European Accounting Review, Vol. 17, No. 3, 2008, p. 559-585.

Research output: Contribution to journalArticle

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