Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Professional Skepticism and Auditors’ Assessment of Misstatement Risks: The Moderating Effect of Experience and Time Budget Pressure
Issue: Vol. 10, No 4, 2017
Published date: 12-2017 (print) / 12-2017 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Sayed Alwee Hussnie Sayed Hussin
National Audit Department of Malaysia

Takiah Mohd Iskandar
Universiti Kebangsaan Malaysia

Norman Mohd Saleh
Universiti Kebangsaan Malaysia

Romlah Jaffar
Universiti Kebangsaan Malaysia
Keywords: professional skepticism, experience, time budget pressure, and risk of material misstatement
DOI: 10.14254/2071-789X.2017/10-4/17
Index PUBMS: 7848cdad-f90e-11e7-94c4-fa163e5d4f72
Language: English
Pages: 225-250 (26)
JEL classification: M41

Background: This study employs a field experiment to examine the relationship between professional skepticism, experience, and time budget pressure on auditors’ assessment of risk of misstatement. In addition, the study examines the moderating effect of experience and time budget pressure on the relationship between professional skepticism and auditors’ assessment of risk from material misstatements; 2) Method: This study employs a multiple regression analysis on 248 auditors from both Big4 and non-Big4 firms; 3) The results indicate that professional skepticism and experience have positive effects while time budget pressure has a negative effect on auditors’ assessment of risk from material misstatements; and 4) The positive effect of professional skepticism on auditors’ assessment of risk from material misstatement is stronger among more experienced auditors than that among less experienced. On the other hand, the positive effect of professional skepticism on risk assessment is weaker when auditors work under high time budget pressure than that when they work under low time budget pressure. Additional analysis on the samples from the two selected areas, Kuala Lumpur and Selangor, produces consistent results indicating that the use of separate models for different samples is not necessary. Hence, the study uses a single model for the final analysis. The results provide a better understanding on whether the auditors are able to sustain professional skepticism with a given amount of relevant audit experience and under different levels of time budget pressure.


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