Student Perceptions Of Auditor Responses To Evidence Of Suspicious Activities: An Experimental Assessment

This study assessed student perceptions of auditor responses to evidence that a client failed to respond appropriately to suspicious activities that could indicate money laundering. Subjects were presented with a series of randomized cases in which partner type (new vs. experienced), firm type (regional vs. international) and audit fee materiality (not material, material to the local office only, material to the firm) were manipulated asked to indicate their perceptions of the likelihood that an audit partner would discuss such evidence with the client, and the likelihood that the issue would be disclosed by the auditor. Both partner type and audit fee materiality was found to have significant effects on perceived likelihoods.