A study by Oliver Marnet (2021). This study explores behavioural perspectives to provide insights on a contribution of joint audit to audit quality. Oliver Marnet suggests joint audit acts as a means to reduce cognitive bias and enhance professional scepticism in financial statement audits. With reference to social and psychological factors impacting the quality of auditor hypothesis formation and the search for corroborating evidence, he shows that heuristics and cognitive bias particularly affect the application and maintenance of an appropriate level of professional scepticism and the gathering of sufficient appropriate evidence to support managerial assertions during audit.
The review explores behavioural perspectives to provide insights on a contribution of joint audit to audit quality.
- Joint audits have been mandatory features of the listed company market in France since 1966, in Denmark between 1930 and 2005, and are required in some 50 additional countries, across the respective listed markets or applied to particular industries and/or corporate settings.
- Much research on joint audit remains controversial as to approach and conclusions, uses contested proxies for audit quality, and applies disputed and vague means to analyse cost implications, or relies on partial analyses.
- Almost none of the prior research explores the potential for joint audit as a means to mitigate bias during audit with view to enhance audit quality, which is the primary focus of attention of the present report.
- Cognitive bias and heuristics particularly affect the application and maintenance of an appropriate level of professional scepticism.
- Appropriately designed joint audit arrangements can enhance the application of professional scepticism, contribute to audit quality, and increase choice in the audit market.
- A positive contribution of joint audit on audit quality critically depends on the focus, nature, and objective of its implementation.
Joint audit and audit quality by Oliver Marnet :: SSRN