David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
Learn more about PhilPapers
Journal of Business Ethics 41 (1-2):1 - 11 (2002)
This paper uses the intuition from the game of chickento model client-auditor financial reporting and audit effort strategies. Within an ethical context, our model is concerned with the client misreporting and its detection by the auditor. The paper uses a welfare game(similar to the game of chicken) to more formally model client-auditor strategies. The welfare game is then extended to provide additional insight into ethical and audit effort issues.Such a welfare gameprovides equilibrium in mixed strategies. This mixed strategy solution makes possible four outcomes from the game: 1) Financial Statements are fairly presented by client and the auditor performs a normal audit, 2) Financial Statements are fairly presented by client and the auditor performs an extended audit (over auditing), 3) Financial State-ments are misstated by client and detected by the auditor, and 4) Financial Statements are misstated by client and not detected by the auditor (audit failure despite no intended unethical action on the part of the auditor).
|Keywords||auditing ethics game theory|
|Categories||categorize this paper)|
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
|Through your library|
References found in this work BETA
No references found.
Citations of this work BETA
No citations found.
Similar books and articles
Phil A. Brown, Morris H. Stocks & W. Mark Wilder (2007). Ethical Exemplification and the AICPA Code of Professional Conduct: An Empirical Investigation of Auditor and Public Perceptions. [REVIEW] Journal of Business Ethics 71 (1):39 - 71.
Ronald Duska (2005). The Good Auditor – Skeptic or Wealth Accumulator? Ethical Lessons Learned From the Arthur Andersen Debacle. Journal of Business Ethics 57 (1):17 - 29.
Cynthia Jeffrey, William Dilla & Nancy Weatherholt (2004). The Impact of Ethical Development and Cultural Constructs on Auditor Judgments. Business Ethics Quarterly 14 (3):553-579.
Nancy Uddin & Peter R. Gillett (2002). The Effects of Moral Reasoning and Self-Monitoring on CFO Intentions to Report Fraudulently on Financial Statements. Journal of Business Ethics 40 (1):15 - 32.
Anna M. Rose & Jacob M. Rose (2008). Management Attempts to Avoid Accounting Disclosure Oversight: The Effects of Trust and Knowledge on Corporate Directors' Governance Ability. [REVIEW] Journal of Business Ethics 83 (2):193 - 205.
Marietta Peytcheva & Danielle E. Warren (2011). Auditor Professionalism. Business and Professional Ethics Journal 30 (1-2):33-57.
William A. Kerler & Larry N. Killough (2009). The Effects of Satisfaction with a Client's Management During a Prior Audit Engagement, Trust, and Moral Reasoning on Auditors' Perceived Risk of Management Fraud. Journal of Business Ethics 85 (2):109-136.
Roger Hussey & George Lan (2001). An Examination of Auditor Independence Issues From the Perspectives of U.K. Finance Directors. Journal of Business Ethics 32 (2):169 - 178.
Michael A. Pearson (1985). Enhancing Perceptions of Auditor Independence. Journal of Business Ethics 4 (1):53 - 56.
Hollis Ashbaugh (2004). Ethical Issues Related to the Provision of Audit and Non-Audit Services: Evidence From Academic Research. [REVIEW] Journal of Business Ethics 52 (2):143-148.
Added to index2009-01-28
Total downloads16 ( #121,295 of 1,692,983 )
Recent downloads (6 months)2 ( #114,250 of 1,692,983 )
How can I increase my downloads?