Examining the Impact of Audit Firms’ Use of Trait Skepticism Feedback in Auditor Training
Abstract
In response to PCAOB concerns about auditors’ professional skepticism, certain international auditing firms instituted a training practice that involves providing feedback on staff auditors’ trait skepticism levels as measured by the Hurtt Professional Skepticism Scale (“HPSS”), coupled with a prompt to increase skepticism if they scored low in trait skepticism. To test the efficacy of the firms’ training approach, we conducted an experiment in which participants responded to the HPSS and, one week later, examined two simulated accounts receivable confirmation exceptions. We varied whether participants receive HPSS score feedback and/or a skepticism prompt. We find that the audit firms' training practice increases skeptical actions and improves skeptical judgment accuracy compared to a control condition. However, separate analyses reveal that score feedback increases skeptical actions without improving skeptical judgment accuracy (i.e., feedback decreases efficiency without an improvement in effectiveness), whereas the prompt to increase skepticism improves skeptical judgment accuracy and does not affect skeptical actions (i.e., the prompt improves effectiveness without reducing efficiency). Further, the HPSS itself does not predict skeptical behavior in our setting, suggesting the score feedback may not be accurate. Together, these findings suggest that skepticism prompts can be effective, but providing trait skepticism score feedback may lead to unintended negative consequences for audit quality.