Relevant bibliographies by topics / Misstatement

Contents

  1. Journal articles
  2. Dissertations / Theses
  3. Books
  4. Book chapters
  5. Conference papers

Academic literature on the topic 'Misstatement'

Author: Grafiati
Published: 4 June 2021
Last updated: 4 February 2022

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Journal articles on the topic "Misstatement"

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Hamilton, Erin L. "Evaluating the Intentionality of Identified Misstatements: How Perspective Can Help Auditors in Distinguishing Errors from Fraud." AUDITING: A Journal of Practice & Theory 35, no. 4 (March 1, 2016): 57–78. http://dx.doi.org/10.2308/ajpt-51452.

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SUMMARY Although auditors are responsible for detecting misstatements arising from either error or fraud, the auditing standards require very different audit responses when a misstatement is believed to be the result of an intentional act (AS No. 14, PCAOB 2010a). Specifically, if auditors suspect intentional misstatement, then they should perform additional audit procedures, reassess overall fraud risk and the integrity of management, and communicate potential concerns to the audit committee. Thus, if auditors fail to recognize and respond to information indicating a misstatement was caused intentionally, then audit quality may be impaired. The objective of this study is to investigate whether auditors who consider the perspective of the manager responsible for a misstatement's occurrence are more sensitive to circumstances indicating the misstatement was intentional. Using an experiment with audit managers and senior managers, I find that auditors who consider the client manager's perspective assess the misstatement as significantly more likely to be intentional when circumstances surrounding it indicate high, as opposed to low, fraud risk. In contrast, auditors who do not consider the client manager's perspective do not assess intentionality any differently, regardless of the level of fraud risk.
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Omer, Thomas C., Marjorie K. Shelley, and Anne M. Thompson. "Investors' Response to Revelations of Prior Uncorrected Misstatements." AUDITING: A Journal of Practice & Theory 31, no. 4 (November 1, 2012): 167–92. http://dx.doi.org/10.2308/ajpt-10303.

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SUMMARY This study examines investors' response to the disclosure of prior-period waived misstatements under Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in the Current Year. Misstatement correction decisions typically are not observable, and financial statement users have little insight into the disposition of identified misstatements, a dimension of audit and financial statement quality. We find that investors respond negatively to the disclosure of SAB No. 108 misstatements, and this response is associated with the current-period auditor initially waiving the misstatement and client importance. Although SAB No. 108 misstatements were waived under prevailing materiality guidance, our findings suggest that investors interpret SAB No. 108 misstatements as indicating lower perceived audit quality. Data Availability: Data are available from the sources indicated in the text.
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Hammersley, Jacqueline S. "Pattern Identification and Industry-Specialist Auditors." Accounting Review 81, no. 2 (March 1, 2006): 309–36. http://dx.doi.org/10.2308/accr.2006.81.2.309.

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Complex financial statement misstatements that are difficult to diagnose are likely to be described by multiple cues that individually appear innocuous, but that together form an ominous pattern. Because individual auditors are likely to obtain only some of the cues forming the pattern, it is important to understand how well auditors interpret incomplete cue patterns. In this paper, I examine experimentally whether industry-specialist auditors develop problem representations about a seeded misstatement to facilitate interpretation of incomplete patterns. Overall, I find that matched specialists (i.e., those working in their industry) are able to interpret and fill in partialcue patterns, whereas mismatched specialists do not recognize the implications of even full patterns. Matched specialists respond to a partial-cue pattern that potentially indicates misstatement by developing more complete problem representations about the seeded misstatement, assessing higher risk of misstatement, and suggesting procedures that will be efficient and effective at discriminating the presence of the seeded misstatement. Despite higher assessments of misstatement risk when receiving a partial-cue pattern, mismatched specialists' problem representations are impoverished and suggested procedures do not indicate a focus on the seeded misstatement.
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Tuttle, Brad, Maribeth Coller, and R. David Plumlee. "The Effect of Misstatements on Decisions of Financial Statement Users: An Experimental Investigation of Auditor Materiality Thresholds." AUDITING: A Journal of Practice & Theory 21, no. 1 (March 1, 2002): 11–27. http://dx.doi.org/10.2308/aud.2002.21.1.11.

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Auditors are faced with the dilemma of inferring materiality based, in part, on whether a given level of financial misstatement will affect the decisions of statement users. Misstatements in accounting information that are below the materiality threshold are not expected to change users' assessments of a company's economic condition. While the auditing profession accepts materiality in concept, its application in practice is more controversial. In certain settings, the nature of a misstatement, such as changing a small profit into a loss, may affect an auditor's materiality judgment. However, in many cases the magnitude of the misstatement is a critical factor in judging materiality. We focus solely on the issue of magnitude and examine whether financial misstatements that are at or below commonly applied materiality thresholds result in market prices that differ from those resulting from correctly stated information. We conduct a series of 12 experimental asset markets each consisting of 12 independent three-minute trading periods with six traders in each market. We then compare prices for companies generated by markets that are provided either correctly stated information, information containing misstatements that would typically be considered immaterial, or information containing material misstatements. Results indicate that undisclosed misstatements within materiality thresholds that are consistent with current audit practice do not affect market prices, while misstatements well above these thresholds do.
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Messier, William F., and Martin Schmidt. "Offsetting Misstatements: The Effect of Misstatement Distribution, Quantitative Materiality, and Client Pressure on Auditors' Judgments." Accounting Review 93, no. 4 (October 1, 2017): 335–57. http://dx.doi.org/10.2308/accr-51954.

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ABSTRACT This paper reports on the first experimental study to examine how materiality and client pressure affect auditors' judgments of two detected misstatements that have offsetting effects on the client's income. One hundred forty-three experienced German auditors completed a case that varied the misstatement distribution (same or different accounts), the presence or absence of client pressure, and quantitative materiality of the misstatements nested in the client pressure condition (net amount less than or greater than performance materiality). The results show: First, the distribution of the misstatements and client pressure interact. The proportion of auditors who require the client to fully adjust both misstatements is highest when the offsetting misstatements are in two different accounts and there is no client pressure. Second, misstatement distribution interacts with quantitative materiality. The proportion of auditors who deny the bonus when facing client pressure is highest when the level of materiality is greater than performance materiality and the misstatement distribution is in different accounts. Third, audit experience appears to play a role in the auditors' judgments. While more experienced auditors are more likely to fully correct the misstatements when there is no client pressure, they are also more likely to waive the misstatements when faced with client pressure. Additional experimentation confirms these findings. These results have important implications for researchers, practitioners, regulators, and standard setters. Data Availability: The data are available from the authors upon request.
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Comunale, Christie L., and Thomas R. Sexton. "A Fuzzy Logic Approach to Assessing Materiality." Journal of Emerging Technologies in Accounting 2, no. 1 (January 1, 2005): 1–15. http://dx.doi.org/10.2308/jeta.2005.2.1.1.

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Auditors may encounter misstatements during the course of an audit, each of which requires a binary materiality assessment. We propose a fuzzy expert system approach that assesses materiality as a continuous characteristic by allowing a misstatement to possess a degree of materiality between 0 and 1. This potentially allows the auditor more flexibility and precision in materiality assessment, and greater insight regarding subsequent testing and investigation. We demonstrate that a fuzzy expert system can help the auditor incorporate qualitative factors into the materiality assessment of each misstatement and identify which misstatements are most worthy of further investigation. The auditor may compare the materiality assessments of all misstatements to plan an audit strategy. By providing a formal model structure, the fuzzy expert system formalizes and documents the materiality assessment process. This may facilitate better communication within the audit team and with the client, and enhances process consistency across auditors, engagements, and years.
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Singer, Zvi, and Jing Zhang. "Auditor Tenure and the Timeliness of Misstatement Discovery." Accounting Review 93, no. 2 (August 1, 2017): 315–38. http://dx.doi.org/10.2308/accr-51871.

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ABSTRACT Using the timeliness of misstatement discovery as a proxy for audit quality, we examine the association between audit firm tenure and audit quality in a setting that alleviates the endogeneity problem endemic to this line of research. We find that longer audit firm tenure leads to less timely discovery and correction of misstatements, which is consistent with a negative effect of long auditor tenure on audit quality. In addition, using the non-voluntary auditor change following the demise of Arthur Andersen in 2002 as a natural experiment, we show that the misstatements of its former clients were discovered faster than those of comparable companies that retained their auditors throughout the misstatement. This finding speaks to the benefit of a fresh look by a new auditor. An extended analysis shows that longer auditor tenure also leads to misstatements of greater magnitudes, and that the Sarbanes-Oxley Act has mitigated, but not eliminated, the negative effect of long auditor tenure. Last, we show that the negative association between auditor tenure and timely discovery of misstatements is mainly present in the first ten years of an audit engagement. Our study has implications for regulators who continue to express concern regarding lengthy auditor-client engagement. JEL Classifications: K22; K23; L51; M41; M42; M48.
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Boland, Colleen M., Scott N. Bronson, and Chris E. Hogan. "Accelerated Filing Deadlines, Internal Controls, and Financial Statement Quality: The Case of Originating Misstatements." Accounting Horizons 29, no. 3 (February 1, 2015): 551–75. http://dx.doi.org/10.2308/acch-51075.

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SYNOPSIS We examine whether regulations requiring accelerated filing deadlines and internal control reporting and testing affect financial statement reliability. Unlike prior research, we examine whether these regulatory changes are associated with an increase in the likelihood that misstatements originate in the period following the respective change. If the implementation of these rules causes a misstatement, then the misstatement would most likely occur in the period immediately following the rule change. We provide evidence that accelerated filers (AFs) experience an increase in the likelihood of an originating misstatement following the acceleration of filing deadlines from 90 to 75 days. Large accelerated filers (LAFs), however, do not experience a similar increase following this acceleration or the subsequent acceleration from 75 to 60 days. After the implementation of the SOX Section 404 internal control requirements, we find that the likelihood of an originating misstatement declined for AFs but not for LAFs. Taken together, the findings suggest that, although AFs experienced an initial decrease in financial statement reliability, this decrease was temporary. Data Availability: Data are publicly available from the sources identified in the text.
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Sari, Gisilowati Dian Purnama, Agung Juliarto, and Raharja Raharja. "EVALUASI KINERJA AKUNTAN PUBLIK: SKEPTISME PROFESIONAL DAN OUTCOME EFFECT (SEBUAH STUDI EKSPERIMENTAL)." JURNAL AKUNTANSI DAN AUDITING 14, no. 2 (August 5, 2018): 144. http://dx.doi.org/10.14710/jaa.14.2.144-171.

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Professional skepticism is a behavior that it is although encouraged by the profession does not always produce the same outcome (e.g., sometimes it leads to the identification of a misstatement and other times it may not). Highly skeptical auditors increase the likelihood that material misstatements are detected, which is important in promoting investor confidence and global financial stability. However, exercising skepticism may also come at a cost (e.g., budget overruns and potential conflicts with management). The failure to identify a material misstatement in the financial statements may result in restatements. Research on outcome effects suggests that auditor’s performance evaluation may be influenced more by the outcome of their skeptical behavior (i.e., whether or not a misstatement is found) than by whether they engaged in the appropriate level of skeptical behavior. This study aims to obtain new empirical evidence whether there is a difference between the auditor’s performance evaluation when a misstatement is found than when no misstatement is found. These studies further examine whether consultation during the process of exercising skepticism can alleviate the outcome effect bias.This is a experimental that research for a causal relationship between the dependent variabel and independent variable. Respondents in this study is the auditor who has experience doing supervision. Repondents were gethered in the seminar organized by IAPI and PPPK. Seminar was held on 2016 may 30th, in Semarang Quest Hotel. Testing of this reserch using indepent sample t-test and two way ANOVA.Finding of first experiment finds that the outcome of an investigation will affect auditors’ performance evaluations. There are significant differences of performance evaluations between staff who do not identify a misstatement versus staff who do identify a misstatement. This reserach also examine whether responses are significantly higher when a misstatement is found than when no misstatement is found. Futhermor result of this study reveal that consultation with the superior during the process of exercising skepticism effectively mitigate the outcome effects in auditor evaluations. The result of this study show that the evaluators did not effected the outcome effect in auditor’s performance evaluation.
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Sari, Gisilowati Dian Purnama, Agung Juliarto, and Raharja Raharja. "EVALUASI KINERJA AKUNTAN PUBLIK: SKEPTISME PROFESIONAL DAN OUTCOME EFFECT (SEBUAH STUDI EKSPERIMENTAL)." JURNAL AKUNTANSI DAN AUDITING 14, no. 2 (August 5, 2018): 144. http://dx.doi.org/10.14710/jaa.v14i2.19775.

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Professional skepticism is a behavior that it is although encouraged by the profession does not always produce the same outcome (e.g., sometimes it leads to the identification of a misstatement and other times it may not). Highly skeptical auditors increase the likelihood that material misstatements are detected, which is important in promoting investor confidence and global financial stability. However, exercising skepticism may also come at a cost (e.g., budget overruns and potential conflicts with management). The failure to identify a material misstatement in the financial statements may result in restatements. Research on outcome effects suggests that auditor’s performance evaluation may be influenced more by the outcome of their skeptical behavior (i.e., whether or not a misstatement is found) than by whether they engaged in the appropriate level of skeptical behavior. This study aims to obtain new empirical evidence whether there is a difference between the auditor’s performance evaluation when a misstatement is found than when no misstatement is found. These studies further examine whether consultation during the process of exercising skepticism can alleviate the outcome effect bias.This is a experimental that research for a causal relationship between the dependent variabel and independent variable. Respondents in this study is the auditor who has experience doing supervision. Repondents were gethered in the seminar organized by IAPI and PPPK. Seminar was held on 2016 may 30th, in Semarang Quest Hotel. Testing of this reserch using indepent sample t-test and two way ANOVA.Finding of first experiment finds that the outcome of an investigation will affect auditors’ performance evaluations. There are significant differences of performance evaluations between staff who do not identify a misstatement versus staff who do identify a misstatement. This reserach also examine whether responses are significantly higher when a misstatement is found than when no misstatement is found. Futhermor result of this study reveal that consultation with the superior during the process of exercising skepticism effectively mitigate the outcome effects in auditor evaluations. The result of this study show that the evaluators did not effected the outcome effect in auditor’s performance evaluation.
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Dissertations / Theses on the topic "Misstatement"

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Golding, Greg. "The reform of misstatement liability in Australia's laws." Connect to full text, 2001. http://setis.library.usyd.edu.au/adt/public_html/adt-NU/public/adt-NU20040206.161344/index.html.

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Golding, Gregory Ray. "The Reform of Misstatement Liability in Australia's Prospectus Laws." University of Sydney. Law, 2003. http://hdl.handle.net/2123/607.

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This dissertation considers the reforms made to the liability rules in Australia�s prospectus laws during the 1990s. It traces the rewrite of the fundraising provisions at the end of the 1980s as part of the new Corporations Law through to the rewrite of those provisions at the end of the 1990s as part of the CLERP Act initiative. As the law in this area is not particularly well served by detailed judicial or academic analysis in Australia, the dissertation seeks to define the scope of the Australian liability regime by reference to case law analysis, a review of relevant theoretical considerations and comparative analysis with other key jurisdictions. The thesis of the dissertation is that many of the reforms were, particularly initially, misconceived in key respects because of a failure to apply appropriate theoretical underpinnings and to take account of the lessons that could have been learned from a comparative analysis with other key jurisdictions.
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YEUNG, Hau Yi. "Do auditors communicate financial misstatement risk in audit report? Evidence from subsequent accounting restatements in China." Digital Commons @ Lingnan University, 2018. https://commons.ln.edu.hk/otd/31.

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Regulators worldwide are considering expanding current audit reporting model to include key audit matters (KAM). Proponents argue that current audit reports are standardized and uninformative to financial statement users. Auditors in current reporting regime can choose to add explanatory notes in audit reports, however, few current studies have investigated the information content of these explanatory notes. This thesis conducts a textual analysis of explanatory notes in auditor reports and examines the predictability of auditors’ explanatory notes consisting of both unqualified and qualified opinions in determining the incidence of subsequent restatements. I hand collect material accounting restatements disclosed by the public companies in China from 2003 to 2017 and obtain modified audit reports from the CSMAR database during the period between 2003 and 2015. Based on a sample of 22,850 firm-years from 2003 to 2015 in China, I find that modified audit opinions, in general, can communicate financial misstatement risks, and the probability of such risks increases when the type of audit opinion is more severe. I also find that compared with unmodified audit opinion, modified ones containing explanatory notes have a higher possibility of subsequently being restated. Further, the predictive power is not the same across different types of explanatory notes. I have shown that explanatory notes including notes emphasizing contingencies and uncertainties and those relating to audit scope limitations have greater predictive power in explaining subsequent accounting restatements. My findings are robust with a set of additional tests. The findings of this thesis indicate that auditors do communicate financial misstatement risks in modified audit opinions (MAOs). Moreover, the findings are consistent with and provide evidence to support policy changes in developing new enhanced auditor reports introduced by the standard setters in China.
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Lynch, Edward. "The Effects of Irrelevant Information and Minor Errors in Client Documents on Assessments of Misstatement Risk and Sample Size." VCU Scholars Compass, 2017. http://scholarscompass.vcu.edu/etd/4959.

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This dissertation consists of three studies. The first study conducts a 2 by 2 experiment to examine how auditors are influenced by the presence of irrelevant information and minor errors (i.e., “dirty documents”) when reviewing audit evidence produced by the client. This study tasks 97 public accountants to review audit evidence and finds some evidence that dirty documents influence an auditor’s assessment of the likelihood of account misstatement and the appropriate sample size. In order to demonstrate the usefulness of eye-tracking and to help generate potential research topics, the second study reviews extant literature in other disciplines where eye-tracking technology is applied to various judgment and decision-making contexts. This study suggests how eye-tracking can enhance extant accounting research. Illustrative examples of promising research opportunities (extending extant research) are provided. In addition, this study identifies how eye-tracking can be applied to more contemporary decision making and educational circumstances. The third study extends the first experiment through the use of eye-tracking technology. This study utilizes the same 2 by 2 experiment as the first study, but in this case records the eye movements of 43 auditing students while they review the audit evidence. The eye-tracking technology provides additional detail as to the specific evidence participants’ focus on during their review. This study finds that participants focus their attention differently depending on whether irrelevant information or minor errors were present.
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Mäki, Lisa, and Hanna Rautila. "Väsentlighetsbedömning - hur sker det i praktiken? : En studie om hur revisorerna bedömer väsentligheten vid en revision." Thesis, Umeå University, Umeå School of Business, 2007. http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-1162.

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Revision innebär en granskning av årsredovisningen, bokföringen och förvaltningen. Revisionen delas in i fyra steg vilka går ut på att erhålla och acceptera nya klienter, planera revisionen, utföra granskningen samt slutsatser och rapportering. Det viktigaste steget är planeringen där väsentlighet och risk är centrala begrepp. Väsentlighet är en förutsättning vid granskningen och avgör vad revisionen ska innehålla. Det finns både kvantitativa och kvalitativa faktorer att ta hänsyn till vid en bedömning av väsentligheten. Dessa är exempelvis revisionsprogram och standarder samt erfarenhet och personliga egenskaper. Som hjälpmedel för denna bedömning används ett väsentlighetsbelopp som skiljer det väsentliga från det oväsentliga. Det kan vara svårt med väsentlighetsbedömningar eftersom det är diffust samt att det inte finns någon utförlig vägledning. Hur utförs det egentligen i praktiken? Detta leder oss till forskningsfrågan. Hur bedömer revisorerna väsentligheten vid en revision?

Vårt syfte med uppsatsen är att förstå hur revisorer bedömer väsentligheten vid en revision. Vi vill dels ta reda vad de grundar sin bedömning på och dels utreda hur de kommer fram till väsentlighetsbeloppet. Utifrån detta har vi som delsyfte att jämföra olika stora revisionsbyråer för att se om och i så fall vilka skillnader det finns i väsentlighetsbedömningen.

Uppsatsen grundas på litteratur om revision och revisionsprocessen. Genom dessa kommer vi in på väsentlighet och risk. Detta följs av mer ingående litteratur om väsentlighet, väsentlighetsbedömningen samt kvantitativa och kvalitativa faktorer som är viktiga för bedömningen. Vidare diskuteras väsentlighetsbeloppet och dess olika baser samt skillnader i en väsentlighetsbedömning.

Vi har intervjuat sex personer vid tre stora och tre små revisionsbyråer. Således har vi använt oss av en kvalitativ metod. Vi har använt litteraturen som ett hjälpmedel att formulera våra intervjufrågor och case. Respondenternas diskussioner har presenterats i en empiridel med en tillhörande analys av respektive revisor. Därefter har revisorernas uppfattningar jämförts i en mellanfallsanalys.

Revisorerna grundar sin väsentlighetsbedömning på både kvalitativa och kvantitativa faktorer där vissa revisorer är mer kvalitativa och andra mer kvantitativa. De främsta kvalitativa aspekterna är erfarenhet, branschkunskap, kännedom om ägarna, känsla och personligt omdöme. Viktiga kvantitativa aspekterna är revisionsprogram, disciplinärenden och utbildning. Vidare beräknas väsentlighetsbeloppet med olika baser som underlag. Valet av bas grundar sig bland annat på erfarenhet, företagets verksamhet samt på hur stabil resultatutvecklingen är. De mest vanliga baserna är företagets resultat, eget kapital, balansomslutning och omsättning. Revisionsprogrammen som revisorn använder sig av, för att bedöma väsentligheten, ger förslag på ett väsentlighetsbelopp. Detta använder revisorerna som vägledning vilket dem kan ändra själva utifrån vad de anser är lämpligt. Slutligen ser vi större skillnader revisorer emellan än mellan olika stora revisionsbyråer. Väsentlighetsbedömning handlar därmed mer om personlig bedömning. Således uppfattar vi att det är mer kvalitativt än kvantitativt.

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Perry, Suzanne M. "A Reexamination of the Dilution of Auditor Misstatement Risk Assessments: An Experimental Study of the Impact of Client Information Type, Workload, and PCAOB Guidance on Dilution." Thesis, University of North Texas, 2015. https://digital.library.unt.edu/ark:/67531/metadc848096/.

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Many external parties such as investors, creditors, and regulatory agencies, use a company’s financial statements in their decision-making. In doing so, they rely on audit opinions on whether financial statements are fairly stated. However, evidence suggests that there are factors in the audit environment that influence auditor judgments. For example, nondiagnostic client information dilutes auditor judgments when compared to judgments based on diagnostic information alone, especially for less experienced auditors (Hackenbrack 1992; Hoffman and Patton 1997; Glover 1994; Shelton 1999). High time pressure conditions mitigate this effect by refocusing auditor attention toward relevant client information, therefore reducing the impact of nondiagnostic information (Glover 1994, 1997). This research study examines other common audit environment factors to determine if they too influence audit judgment results. An online questionnaire of 149 auditors, CPAs and other accounting professionals indicate that the inclusion of nondiagnostic client information results in a significant change in auditor judgments. The direction of this change follows a theorized pattern; risk assessments that were initially high are reduced, while those that were initially low are increased. Significance was not consistently found for a workload and PCAOB effect on auditor judgment. However, a comparison of the absolute value of dilution effect means across conditions reveals some trending for the proposed unwanted effect of high workload, and the beneficial effect of PCAOB guidance. These results have important implications for auditing research and practice. It extends previous archival research on workload effects and uses a unique questionnaire design to reexamine workload pressures in a behavioral setting. The results of hypothesis testing on workload pressure and PCAOB guidance, although lacking consistent statistical significance; exhibit trends that agree with proposed theoretical relationships. Tests on the effects of nondiagnostic information show strong statistical support for previous studies in the area of psychology and audit. This study’s greatest contribution suggests that audit pressures do not produce equivalent effects on auditor judgment; time pressure improves audit judgment, while workload pressure does not (Glover 1994, 1997). These results can be explained by examining the relationship between stress and audit judgment performance (Choo 1995, Yerkes and Dodson 1908). Different types and different degrees of audit pressures may correspond to different levels of audit pressure. Low to moderate levels of audit pressure, such as the level of time pressure used in Glover’s (1994, 1997) study improve audit performance. Higher audit pressures, such as high workload during an auditor’s busy season, may lower audit performance.
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Mohammed, Derek. "A Comparative Study of Unsupervised Neural Networks in Detecting Financial Misstatements." NSUWorks, 2005. http://nsuworks.nova.edu/gscis_etd/730.

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Financial misstatements have plagued the financial world for several decades. However they have increased in frequency and affected more stockholders and stakeholders in recent years. This intensity of occurrence has prompted the need for more fraud detecting methods from auditors and government regulators alike. Traditionally, statistical models have been utilized in detecting financial misstatements. However, these statistical models are based on assumptions, such as a log-linear relation among the independent variables, which are not applicable to financial data. Artificial neural networks are not bounded by the limitations affecting statistical models, and have been found to give robust results when applied to classification problems. The purpose of study was to compare unsupervised neural networks, the Nonlinear Principal Component Analysis (NLPCA) network and the Kohonen Self-Organizing Map (SOM), in detecting financial misstatements. As a performance benchmark, the results from the NLPCA and SOM networks were compared to the traditional statistical method, the logit model. The dataset used in this study consisted of firms who issued financial statements for the period 1990 to 2005. The dataset was limited to firms from the computer-technology industry and financial services sectors, and whose annual financial statements were publicly available. Using the matched-pair approach, each fraud firm was paired with a similar non-fraud firm based on industry, time period and size. Unlike the Logit model, the NLPCA and SOM models required the determination of several parameters. The configurations for the NLPCA and SOM models were found experimentally. In order to attain a true comparison between the NLPCA, SOM and Logit models, both training and testing for the models were done with the same samples. Using different metrics for comparison it was found that the NLPCA and SOM models were effective in detecting financial misstatements. It was also determined that these unsupervised neural networks produced better classification accuracies than the Logit model. Additionally, the NLPCA model, which is based on correlational learning, marginally outperformed the SOM model, which is based on competitive learning. The results from this study support future use of NLPCA and SOM as assessment tools in detecting financial misstatements.
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Lu, Yingfa. "Developing and testing a framework to impose legal liability on Chinese auditors for misstatements." Thesis, University of Edinburgh, 2009. http://hdl.handle.net/1842/8732.

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This thesis first builds a framework to impose professional liability on Chinese auditors for misstatements and then tests the framework by field work. Auditor liability has been a recurring puzzle. This thesis intends to analyze the complex legal relationships among the players in typical auditing litigations, dissect the arguments from both the auditors and plaintiffs, and develop doctrines and check points that could help the litigation parties to evaluate the merits of their claims, to predict the litigation outcomes, and to mitigate litigation risks in the Chinese setting. The author adopts a utilitarianism perspective and utilizes the theory of “contract and status”. The main methodologies employed include: case report analysis, legal reasoning, interviews, and questionnaire survey. Comparison across jurisdictions and interdisciplinary perspectives have been utilized all through the thesis. In the first part, the author draws a portrait of the Chinese auditing profession, and then moves to synthesize the previous literature on audit liability from both accounting and legal perspectives. After this, a significant part of the thesis is devoted to analyzing the typical UK reported cases since the late 19th century including the Caparo case, Bannerman case and others to discover the UK laws regulating auditor liability. In the following chapter, the recent trends of legislation in the UK and the company law harmonization practice of the EU are reviewed. Then, based on a survey on current Chinese law and an analysis on the feasibility of transplanting the UK and EU practice into China, the author develops a proposed framework integrating doctrines and practical checking points about eligible plaintiffs, duty of care, wrongdoings, standards of care, and damage calculation and allocation in typical litigations. In the second part, the proposed framework is dissected into questions, which are examined through 38 interviews with auditors, regulators, financial statements preparers, and lawyers, and 470 survey questionnaires completed by auditors and members of the financial community, along with questions about responsibility and the technical abilities of auditors. The data from the field produces a cross-section picture of the perceptions of stakeholders on auditor liability. Statistical analysis shows there are significant differences between the auditor and non-auditor on the majority of the related issues, such as auditor’s responsibility, eligible plaintiff, and others. The empirical analysis gives general support for the proposed framework.
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Noh, Suzie. "An exploration of two accounting-based models for earnings misstatements and their implications for stock returns." Thesis, Massachusetts Institute of Technology, 2014. http://hdl.handle.net/1721.1/90228.

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Thesis: M. Fin., Massachusetts Institute of Technology, Sloan School of Management, Master of Finance Program, 2014.
Cataloged from PDF version of thesis.
Includes bibliographical references (pages 56-59).
Using two popular accounting-based models for earnings manipulation (i.e., the Beneish M-Score and the Dechow F-Score) and the financial data of public companies from 2004 to 2012, 1 find that the M-Score (F-Score) predicts less (more) earnings overstatements during the recent financial crisis in 2007-2008 than other sample years. However, a detailed investigation at the industry level reveals that this does not hold in all industries. I further show that the potential misstating firms flagged by the M-Score tend to under-perform the market both at the aggregate and the industry level, and some of those flagged by the F-Score under-perform at the industry level. Finally, by running Fama-French three-factor regressions at the aggregate level, I provide evidence that the firms flagged by the MScore generally yield negative risk-adjusted stock returns. The evidence suggests public availability of financial statements alone does not ensure that all the elements of financial statements are fully integrated into prices in a timely manner. Overall, this study provides substantial support for the use of quantitative accounting analysis in equity trading.
by Suzie Noh.
M. Fin.
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10

Wuttichindanon, Suneerat. "Determinants and consequences of accounting misstatements in Thailand : an analysis of firms subject to enforcement actions and restated financial reports." Thesis, Cardiff University, 2012. http://orca.cf.ac.uk/35826/.

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While the determinants of low earnings quality (GAAP violation) have been examined in prior research, very few studies have been undertaken in firms with concentrated ownership. Financial reporting in concentrated ownership firms is important because the types of agency conflict shift from the shareholder-agent conflict to the principal-principal conflict (i.e. a conflict between controlling shareholders and outside investors). Against this background, this research aims to reveal the determinants of accounting misstatements in concentrated ownership firms and Thai firms form the basis of the sample. In addition, the research assesses the economic consequences of accounting misstatements – an issue that has received relatively little attention in prior research. A study was conducted of a sample of 51 misstatement firm-years, compared with 2,452 non-misstatement firm-years for the financial reports of public companies listed on Thailand Stock Exchange during 2001-2009. The results indicate that Thai firms are more likely to misstate their financial reports when they are close to debt covenant violations and when they need external finance. Corporate governance mechanisms are also important factors influencing the likelihood of accounting misstatements. The likelihood of accounting misstatements increases when the ultimate owner holds more than 25% of the total shares. The determinants of accounting misstatements coincide with the institutional settings of the country. The study of the consequences of accounting misstatements reveals that misstating firms are more financially constrained than non-misstating firms after misstatement announcements. The net amount of capital supplied by capital providers falls significantly, particularly in the net proceeds from share issuances. The examination of both the determinants and consequences of accounting misstatements extends our understanding on the cost-benefit trade-off in the financial reporting process. The insights from this research might also be applicable to other countries where the country’s institutions are similar to those of Thailand and where ownership concentration is high.
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Books on the topic "Misstatement"

1

International Auditing and Assurance Standards Board. Understanding the entity and its environment and assessing the risks of material misstatement. New York, N.Y: International Federation of Accountants, 2003.

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Commission, Manitoba Law Reform. Pre-contractual misstatements. Winnipeg, Man: Manitoba Law Reform Commission, 1994.

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Witting, Christian A. Liability for negligent misstatements. Oxford: Oxford University Press, 2004.

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Desai, Naman. The effects of group brainstroming on the auditor's search for potential misstatements and assessment of fraud risk in the presence of pressures and opportunities. Ahmedabad: Indian Institute of Management, 2015.

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Office, General Accounting. Financial management: Misstatements of NASA's statement of budgetary resources : report to the chairman, Subcommittee on Space and Aeronautics, Committee on Science, House of Representatives. Washington, D.C. (P.O. Box 37050 Washington 20013): U.S. General Accounting Office, 2001.

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Grantham, Ross, Kit Barker, and Warren Swain. Law of Misstatement: 50 Years on from Hedley Byrne V Heller. Bloomsbury Publishing Plc, 2015.

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Hedley, Steve, and Nicola Padfield. 5. Negligence: property and economic losses. Oxford University Press, 2013. http://dx.doi.org/10.1093/he/9780199586561.003.0508.

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Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter discusses negligence liability for property and economic losses. It covers the distinction between property damage and pure economic loss; ‘special relationships’ and negligent misstatement; the cutting edge of liability; organizing concepts; and the influence of surrounding areas of law.
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Krommes, Werner. Kommentar International Standards on Auditing: The Risks of Material Misstatement - Das Aufklärungsmodell des ISA 315. Springer Gabler, 2018.

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French, Derek. 17. Company officers, secretary and auditor. Oxford University Press, 2018. http://dx.doi.org/10.1093/he/9780198815105.003.0017.

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This chapter focuses on company officers (secretaries, auditors and managers), with emphasis on their responsibilities and liabilities under the Companies Act 2006 (CA 2006) and the appropriate sanctions for breach of its requirements. It first considers who, in general terms, is an ‘officer’ or ‘manager’ of a company for the purposes of criminal or fiduciary liability. Then it deals with the appointment and qualifications of secretaries and the appointment and reappointment of auditors. There is discussion of auditors’ remuneration, integrity and independence, the required contents of an auditor’s report and an auditor’s investigative powers. There is analysis of an auditor’s liability in contract and tort for negligence in carrying out the audit and negligent misstatement in an auditor’s report. The chapter cites relevant legislation, including CA 2006 and UK Corporate Governance Code, and considers two particularly significant cases: Caparo Industries plc v Dickman [1990] 2 AC 605 and Stone and Rolls Ltd v Moore Stephens [2009] UKHL 39, [2009] AC 1391.
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Witting, Christian. Liability for Negligent Misstatements. Oxford University Press, USA, 2005.

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Book chapters on the topic "Misstatement"

1

Mullis, Alastair, and Ken Oliphant. "Economic Loss and Negligent Misstatement." In Torts, 33–49. London: Macmillan Education UK, 1993. http://dx.doi.org/10.1007/978-1-349-12659-0_5.

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Du, Xingqiang. "Auditor-CEO Surname Sharing and Financial Misstatement." In Contributions to Finance and Accounting, 13–80. Singapore: Springer Singapore, 2021. http://dx.doi.org/10.1007/978-981-33-4462-4_2.

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Du, Xingqiang. "Auditor-Client Religiosity Convergence and Financial Misstatement." In Contributions to Finance and Accounting, 299–365. Singapore: Springer Singapore, 2021. http://dx.doi.org/10.1007/978-981-33-4462-4_8.

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Kestenbaum, Bert. "Mortality of Centenarians in the United States." In Demographic Research Monographs, 57–66. Cham: Springer International Publishing, 2020. http://dx.doi.org/10.1007/978-3-030-49970-9_6.

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AbstractIn the United States, we have not yet reached the point where unedited numerators and denominators for death rates or probabilities are of satisfactory quality for measuring the mortality of centenarians. Ignoring this reality can lead to an estimation of extreme-age mortality which is unacceptable, as is the case for the NCHS’ Data Brief no. 233. Even the better-quality data from the Medicare health insurance program are beset by problems of (1) unreported or unrecorded deaths and (2) date of birth misstatement. On the other hand, there are steps that can be taken to improve the quality of the underlying data, so that the threshold age at which a mathematical model replaces actual data and closes out the life table is pushed further out.The paper begins with a description of the unacceptable results published in Data Brief no. 233 and a critical examination of their sources. The main part of the paper presents some steps to improve the quality of the Medicare enrollment counts. By rearranging the historical series on Medicare enrollment by cohort, it is possible to eliminate unreported and unrecorded deaths. A simple model is then introduced to deal with date of birth misstatement.
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Liang, Yunjing. "Risk Analysis of Major Financial Misstatement in Agricultural Enterprises." In IEIS 2020, 23–34. Singapore: Springer Singapore, 2021. http://dx.doi.org/10.1007/978-981-33-4363-4_3.

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Feng, Yuting, Xuemeng Guo, and Hongchang Li. "Does the Corporate Governance Status and Its Changes Affect the Auditor’s Major Misstatement Risk Judgment?" In IEIS2019, 193–209. Singapore: Springer Singapore, 2020. http://dx.doi.org/10.1007/978-981-15-5660-9_15.

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Gu, Xiaorong. "How to Prevent China’s Listed Companies from Making Misstatements." In Changing Corporate Governance Practices in China and Japan, 29–51. London: Palgrave Macmillan UK, 2008. http://dx.doi.org/10.1057/9780230595156_3.

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"Revenue Misstatement." In The Fraud Audit, 223–36. Hoboken, NJ, USA: John Wiley & Sons, Inc., 2012. http://dx.doi.org/10.1002/9781118387047.ch13.

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Brennan, Carol. "4. Pure economic loss and negligent misstatement." In Tort Law Concentrate. Oxford University Press, 2017. http://dx.doi.org/10.1093/he/9780198803904.003.0004.

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This chapter discusses the law on pure economic loss, which is loss that is not derived from physical injury, death, or property damage. It may be consequential, that is resulting from the acquisition of a defective product or property. More commonly, the issue arises due to a negligent misstatement, or provision of professional services. This is an area of commercial and professional importance where there has been a trend towards expansion in the area of negligent misstatement. The two key cases in this area are Murphy v Brentwood District Council and Hedley Byrne v Heller.
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Brennan, Carol. "4. Pure economic loss and negligent misstatement." In Tort Law Concentrate, 32–47. Oxford University Press, 2019. http://dx.doi.org/10.1093/he/9780198840541.003.0004.

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This chapter discusses the law on pure economic loss, which is loss that is not derived from physical injury, death, or property damage. It may be consequential, that is resulting from the acquisition of a defective product or property. More commonly, the issue arises due to a negligent misstatement, or provision of professional services. This is an area of commercial and professional importance where there has been a trend towards expansion in the area of negligent misstatement. The two key cases in this area are Murphy v Brentwood District Council and Hedley Byrne v Heller.
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Conference papers on the topic "Misstatement"

1

Xu, Wenjie. "Research and Analysis of Material Misstatement Risks of Financial Statement." In 2015 International Conference on Education Technology, Management and Humanities Science (ETMHS 2015). Paris, France: Atlantis Press, 2015. http://dx.doi.org/10.2991/etmhs-15.2015.45.

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Jiang, Yicong. "Financial recognition of material misstatement risks of listed companies on GEM." In 2017 4th International Conference on Information Technology and Career Education. Asian Academic Press Co., Limited, 2017. http://dx.doi.org/10.24104/rmhe/2017.04.01002.

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Yuan, Fei, and Ping Tao. "The relationship between the board characteristics and the risk of material misstatement." In 2014 International Conference on Management Science and Engineering (ICMSE). IEEE, 2014. http://dx.doi.org/10.1109/icmse.2014.6930371.

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Wang, Lan, and He Zhang. "Research on the Risk Factors of Material Misstatement of Listed Companies in China." In 7th International Conference on Humanities and Social Science Research (ICHSSR 2021). Paris, France: Atlantis Press, 2021. http://dx.doi.org/10.2991/assehr.k.210519.200.

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Dalimunthe, Bardan, and Dina Patrisia. "The Effect of Financial Characteristics, Misstatement and Audit Quality toward the Financial Performance in West Sumatera." In Proceedings of the Third Padang International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA 2019). Paris, France: Atlantis Press, 2019. http://dx.doi.org/10.2991/piceeba-19.2019.61.

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Huo, Xinwen, and Li Zhang. "Research on the assessment of the risk of material misstatement of the enterprise under internet plus environment." In 2017 3rd International Conference on Information Management (ICIM). IEEE, 2017. http://dx.doi.org/10.1109/infoman.2017.7950366.

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Kochinev, Yury, Elena Antysheva, and Natalia Putintseva. "Formalization of Analytical Procedures for Assessing the Risks of Material Misstatement in Financial Statements due to Fraud." In SPBPU IDE '20: SPBPU IDE-2020. New York, NY, USA: ACM, 2020. http://dx.doi.org/10.1145/3444465.3444532.

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Milgunova, Irina. "THE RELATIONSHIP OF THE EVALUATION OF ACCOUNTING CONTROL PROCEDURES AND THE RISKS OF MATERIAL MISSTATEMENT OF THE FINANCIAL STATEMENTS IN THE AUDIT." In 4th International Multidisciplinary Scientific Conference on Social Sciences and Arts SGEM2017. Stef92 Technology, 2017. http://dx.doi.org/10.5593/sgemsocial2017/13/s03.084.

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Bozhinovska Lazarevska, Zorica, Marina Trpeska, Atanasko Atanasovski, and Ivan Dionisijev. "AUDIT PROFESSION IN THE SHADOW OF THE COVID -19 - A PERCEPTION OF AUDITORS IN REPUBLIC OF NORTH MACEDONIA." In Economic and Business Trends Shaping the Future. Ss Cyril and Methodius University, Faculty of Economics-Skopje, 2020. http://dx.doi.org/10.47063/ebtsf.2020.0006.

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The virtual practice has posed serious challenges and opened many dilemmas for the auditors. How to obtain sufficient and appropriate audit evidence in the absence of communication with the client, to assess the risks of material misstatement, to recognize the symptoms of fraud, to check subsequent events, to assess the ability for ‘going concern’, to exercise the required level of professional skepticism, and how to write an audit report in which the auditor will offer a reasonable assurance to users of the opinion expressed. Health experts warn that even in the postCOVID-19 period, the social distance will be an integral part of our lives. In that regard, IFAC also points out the need to prepare auditors for work in the so-called "the new normal". The paper researches how the COVID-19 pandemic affects the audit profession in the Republic of North Macedonia. For that purpose, our research is based on a survey distributed to the certified auditors, members of IORRM (Institute of Certified Auditors of the Republic of North Macedonia). From the questions asked, we have concluded whether and how much the pandemic has changed the approach of auditors in conducting audit engagements, how auditors have managed to amortize the initial shock, whether they have prepared a strategy for virtual practice in the environment of the so-called "new normal" and what are the biggest challenges they expect to face in the post-COVID world. In general, it can be concluded that all challenges posed by the pandemic will be more easily overcome by joint and smart action of certified auditors and related associations and regulatory bodies, in order to find alternative ways of acting in a radically changed environment under the influence of the COVID-19 pandemic. In addition to analyzing data obtained from the survey, documents related to the impact of COVID-19 pandemic worldwide are used, as well as other literature and scientific papers on how the audit profession responds to the COVID crisis.
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Ouyang, Iris Chuoying, and Elsi Kaiser. "Understandable misstatements lead to gentle corrections: Prosodic realization of epistemic gaps." In Speech Prosody 2016. ISCA, 2016. http://dx.doi.org/10.21437/speechprosody.2016-83.

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