Journal article

Publication year: 2021

Pages: 989-1012

Journal: European Accounting Review

Volume number: 30

Issue number: 5

ISSN: 0963-8180

eISSN: 1468-4497

DOI Link: https://doi.org/10.1080/09638180.2021.1899014

Publisher: Taylor and Francis Group

Abstract: 
We investigate how the design of audit processes influences employees' reporting decisions. We focus specifically on detective employee audits for which several employees are randomly selected after a defined period to audit their ex-post behavior. We investigate two design features of the audit process, namely, employee anonymity and process transparency, and analyze their impact on misreporting. Overall, we find that both components influence the extent of individuals' misreporting. A nonanonymous audit decreases performance misreporting more than an audit in which the employee remains anonymous. Furthermore, the high incidence of performance misreporting in the case of anonymous audits can be decreased when the process transparency is low. Thus, our study informs accountants about how the two design features of employee anonymity and transparency of the audit process can be used to constrain performance misreporting to increase the efficiency of audits.

Harvard Citation style: Ewelt-Knauer, C., Schwering, A. and Winkelmann, S. (2021) Probabilistic Audits and Misreporting - the Influence of Audit Process Design on Employee Behavior, European Accounting Review, 30(5), pp. 989-1012. https://doi.org/10.1080/09638180.2021.1899014

APA Citation style: Ewelt-Knauer, C., Schwering, A., & Winkelmann, S. (2021). Probabilistic Audits and Misreporting - the Influence of Audit Process Design on Employee Behavior. European Accounting Review. 30(5), 989-1012. https://doi.org/10.1080/09638180.2021.1899014