Evidence of Fraud, Audit Risk and Audit Liability Regimes
Patterson, Evelyn; Wright, David W.
2003-03
Citation
Patterson, Evelyn; Wright, David; (2003). "Evidence of Fraud, Audit Risk and Audit Liability Regimes." Review of Accounting Studies 8(1): 105-131. <http://hdl.handle.net/2027.42/47720>
Abstract
We investigate the effectiveness of proportionate liability in reducing the probability of fraud and audit risk relative to joint and several liability in two strategic audit settings: one that provides conclusive evidence of fraud and one that provides inconclusive evidence of fraud. In both settings the auditor makes an audit effort choice, but in the second setting the auditor also evaluates the audit evidence. Our results show that when the auditor chooses only effort, a proportionate liability rule with large marginal liability relief decreases audit risk. However, when the auditor also evaluates the audit evidence this result no longer holds.Publisher
Kluwer Academic Publishers; Springer Science+Business Media
ISSN
1380-6653 1573-7136
Other DOIs
Types
Article
Metadata
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