This study extends prior research by examining the effects of dispositional trust, induced skepticism, and fraud‐specific audit experience on attention to aggressive financial reporting practices and judgments of potential misstatement. In an experimental analysis using 125 practicing auditors, this study finds that auditors who are less trusting of others attend more to evidence of aggressive reporting than do more trusting auditors, and higher levels of induced skepticism increase attention to aggressive reporting. Further, auditors who pay more attention to evidence of aggressive reporting are more likely to believe that intentional misstatement occurred. General audit experience was not a predictor of auditors' attention to aggressive reporting or auditors' judgments about intentional misstatements. Auditors with more fraud‐specific experience, however, were more likely than auditors with less fraud‐specific experience to believe that intentional misstatement had occurred when evidence of aggressive reporting exists.

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