DYSFUNCTIONAL BEHAVIOUR IN THE AUDIT ENVIRONMENT: THE EFFECT OF FRAUD RISK ASSESSMENT AND AUDITORS’ INDUSTRY KNOWLEDGE ON AUDIT QUALITY
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Date
2021
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Publisher
UNIVERSITI MALAYSIA TERENGGANU
Abstract
Studies in Dysfunctional Audit Behaviours (DAB) demonstrate the negative effects on
Audit Quality (AQ), particularly Premature Sign-Offs (PMSOs). According to the
findings, auditors with a lack of industry knowledge tend to engage in Premature Sign-
Offs, which, ultimately, affects their opinion on the financial statement. Furthermore,
an audit is considered successful when the auditors are capable of assessing fraud risk
and detecting fraud in the financial statement. Thus, this study examines two
objectives. It examine the relationship between fraud risk assessment and auditors’
industry knowledge on audit quality in the Jordanian audit firms. It is significant to
mention here that no investigation has been done to date that has simultaneously
examined audit quality from the perspective of dysfunctional behaviour linked to
auditors' industry knowledge and fraud risk assessment. Additionally, most of the
relevant literature is derived from developed countries. This study fills the gap in the
literature investigating the effect of fraud risk assessment and auditors' industry
knowledge from the behaviour perspective – Premature Sign-offs. A quantitative
research approach and an experimental study was adopted involving the use of a
questionnaire response (gathered from 144 Jordanian external auditors) to collect the
data by hand. These participants were currently working in either Big-Four or non-Big
Four firms in Jordan. The responses were analysed using IBM-SPSS, ANOVA, and
ANCOVA to test the effect of fraud risk assessment and auditors’ industry knowledge
on audit quality.