Triangulation of audit evidence in fraud risk assessments |
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Authors: | Ken T. Trotman William F. Wright |
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Affiliation: | 1. School of Accounting and Centre for Accounting and Assurance Research, Australian School of Business, University of New South Wales, Sydney 2052, Australia;2. Department of Accountancy, College of Business, University of Illinois at Urbana-Champaign, 1206 South Sixth Street, Champaign, IL 61820, United States |
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Abstract: | Drawing on the triangulation framework of audit evidence ( and ), we experimentally test for the conditions, if any, under which financial-statement auditors alter their fraud-risk assessments based on whether external evidence provides positive or negative news about underlying business performance. We focus on the condition in which two kinds of management-controlled audit evidence – evidence from the financial statements and evidence from internal data depicting performance of a key business process – is contradicted by external evidence suggesting that a key business objective has not been attained. According to the triangulation framework, such contradictory external evidence should heighten auditors’ skepticism about the veracity of management-controlled evidence and increase their assessment of fraud risk. |
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