Document Type

Other

Publisher

Edith Cowan University

Place of Publication

Perth, Western Australia

School

Small and Medium Enterprise Research Centre

Comments

Chung, J. & Monroe, G. (1998). The effects of counterexplanation and audit groups on fraud detection. Perth, Australia: Edith Cowan University.

Abstract

Prior studies have found that auditors' fraud detection rates are relatively low (Bernardi 1994; Pincus 1991 ). The present study examines whether counterexplaining inaccurate judgments will increase fraud detection rates and whether audit groups can counterexplain more effectively compared to individual auditors. The possible negative effect of counterexplanation is examined by requiring audit groups and individual auditors to counterexplain accurate judgments. The purpose of this 'inanipulatiori is to determine whether counterexplaining accurate judgments will lead to negative belief revision, and whether this negative belief revision will be mitigated by the use of audit groups. A 2 x 2 x 2 experiment which examined groups/individuals, initial judgment and explanation/ counterexplanation was carried out. The results support the hypotheses that counterexplaining inaccurate judgments leads to more accurate judgments and counterexplaining accurate judgments leads to less accurate judgments. The finding on whether audit groups could counterexplain more effectively than individual auditors requires further explanation.

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