ABSTRACT
Audit standards require auditors to assess fraud risk and maintain professional skepticism (PS) throughout an audit engagement (American Institute of Certified Public Accountants (AICPA) 2019a). Our study investigates the effects of Machiavellianism (high/low) and fraud risk indicators (high/low) on fraud risk assessment. Specifically, 118 experienced auditors assessed fraud risk in a 2 × 2 experiment where Machiavellianism was measured, and fraud risk indicators were manipulated between subjects. Building on trait activation theory, which indicates underlying personality traits will be activated based on task or situational cues, we predicate, and results imply, that auditors with higher Machiavellian traits assess fraud risk significantly higher when fraud risk indicators are low. These results have important implications, as research has shown that an auditor’s initial fraud risk assessment influences the level of skepticism throughout an audit engagement.
Data Availability: Contact first author for more information.
