Date of Award


Document Type



Edith Cowan University

Degree Name

Master of Accounting by Research


School of Business and Law

First Supervisor

Dr Zubaidah Ismail

Second Supervisor

Dr Dilhani Kapu Arachchilage


This study examines evidence selection strategy among external auditors (i.e. professionals) and accounting students (i.e. novices) in a going concern assessment task considering three factors; hypothesis framing, prior expectation and professional “trait” scepticism as measured by Hurtt (2010) scale. Within this context, the study sets out to accomplish three goals: (1) to re-examine evidence selection strategy based on hypothesis framing and prior expectation, (2) to validate the Hurtt (2010) scale using expert reviews and confirmatory factor analysis and (3) to investigate whether professional trait scepticism influences selection strategy.

Owing to the incidence of high-profile accounting and auditing scandals worldwide, the regulatory bodies identified that two of the top five areas that contributed to audit deficiencies are: (a) failure to gather sufficient appropriate audit evidence and (b) insufficient level of professional scepticism. However, it is to be noted that the regulatory bodies did not specify how professional scepticism is to be measured. As a result, researchers across the globe explored this concept and tried to understand what factors influence professional scepticism and how it can be measured. One of the factors was identified as the trait of an individual that affects professional scepticism. Other factors include incentives, knowledge and audit experience. This study was motivated by the fact that limited research has been conducted to date to understand the effect of trait scepticism on auditors’ behaviour. Accounting students were chosen to understand the influence of trait scepticism unaffected by audit experience.

The result reconfirmed previous research findings that auditors across junior to partner level exhibit disconfirmation selection behaviour mainly because of sensitivity to the potential loss function for not identifying a failed firm whereas students exhibit confirmatory selection behaviour indicating they are not so sensitised to the loss function that may be due to lack of real audit experience.

This study also validates the Hurtt (2010) 30 item scale and reduces the scale to 16 items to have a good model fit. With the reduced 16 item scale, trait scepticism was measured for individual auditors and students and the study found that trait scepticism had an effect on evidence search among students but only a marginally effect among auditors. The result may be due to the fact that although devoid of practical audit experience students are aware of the concept of professional scepticism and going concern assessment as these concepts are taught in their curriculum, hence were primed to the task and approached it cautiously. For the auditors, it may be the task did not motivate them to exhibit enough scepticism as they are well versed in the nature of going concern assessment. Further, other factors (i.e. states or situations) such as accountability, incentives, knowledge and experience also influence their day-to-day work and, therefore, may be in combination with trait scepticism, be required to exhibit sceptical behaviour. However, after controlling the different situations formed by a combination of hypothesis framing and prior expectation, the results showed that trait scepticism influences evidence selected among auditors but not among students.

The study contributes to existing auditing literature by validating the Hurtt (2010) scale and by investigating the impact of trait scepticism on selection strategy among students in an Australian university and external auditors based in the US. Further, this study explored the impact of hypothesis framing and prior expectation among students and re-examined the effect of hypothesis framing and prior expectation using auditors

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