The Effects of Source Integrity and Consistency of Evidence on Auditors' Judgments

This study uses the Elaboration Likelihood Model as a theoretical framework to examine auditors' sensitivity to the integrity of an evidence source, the consistency of more than one piece of evidence and the interaction between these two factors. Two independent scenarios were examined. The first involved evidence provided by a source external to the client, namely a lawyer acting for the client in a lawsuit concerning patent infringement. Source integrity was manipulated as either high or low, while the evidence provided by the source was either consistent or inconsistent with evidence obtained from within the client. Participants assessed the likelihood that the client would be found guilty of patent infringement and whether any liability should be recognized in the financial statements. Both the integrity and consistency factors and their interaction were significant in explaining auditors' judgments. The second scenario involved representations from client management concerning inventory obsolescence. Management integrity was manipulated as high or low and the evidence provided by management was either consistent or inconsistent with other evidence obtained from within the client. Participants assessed the likelihood that inventory was overstated and that a further writedown was required. For this scenario, only the integrity factor was a significant determinant of auditors' judgments.