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Tammie Schaefer, Joseph F. Brazel  | 


In September 2015, the International Auditing and Assurance Standards Board (IAASB) and this research team agreed to conduct a project that involved summarizing academic research in the area of auditor professional skepticism from 2013 to 2015. The work was intended as an update of the auditor professional skepticism literature since the syntheses performed by Nelson (2009) and Hurtt et al. (2013).

The research forms part of the IAASB project on how to more effectively respond to issues related to professional skepticism. Three specific deliverables formed the academic research: a summary listing relevant research related to professional skepticism, a presentation of significant observations to the IAASB at its December 2015 meeting, and an executive summary of the project. The full summary and related documents can be found on the IAASB’s December 2015 Meeting Page.

The following is Part I of a three-part series. Part II can be found here and Part III can be found here.

Given the substantial role that incentives play in influencing behavior, two recent studies have investigated the link between auditor evaluations and professional skepticism. Brazel et al. (2015) illustrate that superiors on the audit team evaluate their staff based on the outcome of their skeptical behavior. If the skeptical auditor finds a misstatement, the auditor is rewarded. If there is a reasonable explanation for an evidence inconsistency and no misstatement is identified, the skeptical auditor is penalized (evaluated significantly lower). The paper finds this "outcome effect" to be present even under conditions where the skeptical auditor keeps the superior "in the loop" during the course of exercising professional skepticism, and even when evaluators give their approval to engage in the skeptical behavior.

Via a survey of auditors, Westermann et al. (2015) attempt to identify the sources of pressure that increase or decrease auditor professional skepticism in practice. The study finds that sources that hold auditors accountable for quality (PCAOB inspections and work paper reviews) increase professional skepticism and sources that promote defensibility or profitability (time budget pressure and excessive documentation) reduce professional skepticism. In short, the study's results indicate that the effect of accountability on professional skepticism depends on the source of pressure.

Key Observations:

  • The evaluation of professional skepticism may depend more on the outcome than the process. This insight into the evaluation of professional skepticism should inform inspections of firms’ evaluation systems/quality controls.
  • The accountability or pressures associated with a potential inspection can enhance auditor professional skepticism, unless excessive documentation to appease inspectors becomes the auditor’s overriding concern.


Given that the appropriate application of professional skepticism is a cognitively demanding and time-consuming process, two current studies examine how the auditor’s workload can affect their application of professional skepticism. Brazel et al. (2015) find that time pressure and workload impact professional skepticism. Their study reports that if the US Security and Exchange Commission’s 10-K filing accelerations in the 2000s required an acceleration of the audit report date, earnings quality suffered. Audit partners, who experienced the 10-K accelerations, reported in a survey that more time pressure, induced by the need to meet shorter 10-K filing deadlines, may have limited the extent to which auditors on their engagements exercised professional skepticism. Auditors responding to a survey in Persellin et al. (2015) indicate that their workload (in hours) often exceeds the point at which they believe audit quality starts to suffer (due mainly to deadlines and staffing shortages), with 40% indicating that their judgment begins to be impaired (including reduced professional skepticism).

Key Observations:

  • Substantial time pressure, particularly at year-end, can impair professional skepticism.
  • If a future reporting acceleration or other regulation curtails the time available for year-end audits, professional skepticism may become impaired and audit quality could suffer.
  • Solutions to year-end time pressure appear to be moving testing at final to interim, rescheduling other work, and working more hours.
Tammie Schaefer

Assistant Professor of Accounting at the University of Missouri, Kansas City

Tammie Schaefer is an Assistant Professor of Accounting at the University of Missouri – Kansas City where she teaches undergraduate and graduate courses in auditing and tax. Her research focuses on fraud detection, professional skepticism, nonfinancial measures, consultations, and judgment and decision-making in auditing and tax. Her research in these areas has led to publications in The Accounting Review and Contemporary Accounting Research. The Institute for Fraud Prevention, the Center for Audit Quality, KMPG, the International Association for Accounting Education and Research, the University of South Carolina, and the University of Missouri – Kansas City have all supplied her with grants to support her research. In 2013 Tammie received the American Accounting Association Auditing Section’s Best Ph.D. Student Paper Award for her dissertation. She is a member of the AICPA’s Accounting Doctoral Scholars (ADS) Program, and prior to obtaining her Ph.D., Tammie was an audit senior with PwC.

Joseph F. Brazel

Professor of Accounting and University Faculty Scholar, North Carolina State University

Joseph F. Brazel is the Jenkins Distinguished Professor of Accounting and a University Faculty Scholar at North Carolina State University where he teaches undergraduate and graduate courses in auditing. His research focuses on fraud detection, professional skepticism, data and analytics, nonfinancial measures, investor and CFO responses to fraud red flags, fraud brainstorming, and judgment and decision-making in auditing. He has been published in The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, Accounting Organizations and Society, and Review of Accounting Studies. The Institute for Fraud Prevention, the FINRA Investor Education Foundation, the Institute of Management Accountants, the Institute of Internal Auditors, Ernst and Young, KMPG, the International Association for Accounting Education and Research, and North Carolina State University have all supplied him with grants to support his research. In 2014 Joe received the AAA/Deloitte Wildman Medal Award, presented annually to the publication judged to have made the most significant contribution to the advancement of the practice of accounting. While presenting his research to many academic audiences, Joe has also presented his research to the PCAOB, IAASB, SEC, FINRA, as well as many practitioner audiences. He has served on the American Accounting Association’s Notable Contributions to the Accounting Literature Award Selection Committee, Competitive Manuscript Award Committee, COSO Task Force, as well as AICPA’s Assurance Research Advisory Group. Prior to obtaining his Ph.D., Joe was an audit manager with Deloitte.

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