BEYOND A REASONABLE DOUBT: AUDITOR CONFIDENCE VERSUS AUDIT EFFECTIVENESS

Abstract

This research examines auditor confidence in a fraud detection task to establish whether or not there is a relationship between auditors’ confidence and audit effectiveness. The research used a sample of 342 seniors from 40 offices of five international accounting firms. These participants were assigned to different client types: high integrity clients, low integrity clients and a control group. Given the average detection rate for fraud of 42.1 percent and an expressed rate of decision confidence of 78.8 percent, the research finds that auditors overestimate their effectiveness (i.e., actual fraud detection rate) when compared to their estimated decision confidence.