The effect of Digital

Tools on Auditors’
Professional Scepticism

A Quantitative Study of Professional Scepticism in the

Swedish Audit Profession

MASTER THESIS WITHIN: Business Administration

NUMBER OF CREDITS: 30 ECTS
PROGRAMME OF STUDY: Civilekonom
AUTHOR: Alexandra Kantonenko & Therése Karlström
TUTOR: Timur Uman
JÖNKÖPING May 2020
Master Thesis in Business Administration
Title: The effect of Digital Tools on Auditors’ Professional Scepticism
Authors: Alexandra Kantonenko and Therése Karlström
Tutor: Timur Uman
Date: 2020-05-18

Key terms: Professional Scepticism, Structure and Judgment, CAATs, Audit Process

Abstract

Purpose: The purpose of this study is to investigate and analyze whether the relationship
between structural domains represented by CAATs and judgment represented by professional
scepticism is related to auditors’ individual characteristics, trait scepticism.

Methodology: This study is based on a quantitative method in the form of a questionnaire sent
to all Swedish authorized auditors. The response rate was 16.8 per cent. The responses were
analyzed by Spearman correlation matrix, principal component analysis, multiple linear
regression analysis, and hierarchical moderated multiple regression analysis. Moreover, this
thesis is based on a positivistic perspective to get a general picture of professional scepticism.
A deductive approach, going from theory to empirics, has been implemented.

Findings: The results showed a positive relationship between judgment represented by

professional scepticism and structure represented by CAATs, where auditors’ individual
characteristics, trait scepticism, have a positive moderating effect on the relationship.

Theoretical perspectives: We apply the profession theory, comfort theory and structure and
judgment at Swedish authorized auditors with diverse experience.

i
Acknowledgements

Approximately 16 weeks of writing this thesis have passed and it is after a lot of struggle,
confusion, and effort that we have completed this thesis and are ready to present our results.
With this project we hope to highlight the importance of professional scepticism and shed more
light on the digital tools in the Swedish audit profession.

We would like to extend our gratitude towards our supervisor Timur Uman for his kind
contribution to this project. During the supervisions, Timur has been important support, guiding
us with motivation and commitment. His contributions have made a significant impact on this
research and contributed to the coherence of the findings. For this, we are very thankful.

We are also grateful for the engagement provided by the authorized auditors who took their
valuable time to participate in this study. Without their input, it would not have been possible
to complete the thesis. Finally, we would like to take the opportunity to thank teachers and staff
at Jönköping International Business School. We have had four incredible years and are now
moving on with new knowledge and experiences.

_______________________ _________________________

Alexandra Kantonenko Therése Karlström

Jönköping International Business School

May, 2020

ii
 Table of Contents
1. Introduction ...................................................................................1
1.1 Background ................................................................................................................. 1
1.2 Problem Definition ...................................................................................................... 4
1.3 Purpose ........................................................................................................................ 8
1.4 Research Question ....................................................................................................... 8
1.5 Outline ......................................................................................................................... 9
2. Literature Review ........................................................................10
2.1 The Audit Profession and The Profession Theory .................................................... 10
2.2 Comfort Theory ......................................................................................................... 12
2.3 Structure and Judgment ............................................................................................. 13
2.3.1 Structure ................................................................................................................. 13
2.3.2 Judgment ................................................................................................................ 15
2.3.3 Structure and Judgment .......................................................................................... 16
2.4 Audit Process............................................................................................................. 19
2.4.1 Planning .................................................................................................................. 20
2.4.2 Execution ................................................................................................................ 20
2.4.3 Reporting ................................................................................................................ 21
2.5 Professional Scepticism as a Representation of Judgment ........................................ 22
2.5.1 State Scepticism ..................................................................................................... 23
2.5.2 Trait Scepticism...................................................................................................... 24
2.5.3 Professional Scepticism in The Auditing Process .................................................. 25
2.6 CAATs as a Representation of Structure .................................................................. 26
2.6.1 CAATs in the Auditing Process ............................................................................. 28
2.7 Professional Scepticism and CAATs ........................................................................ 30
2.7.1 Hypothesis 1 ........................................................................................................... 32
2.8 Individual Trait Scepticism ....................................................................................... 32
2.8.1 Hypothesis 2 ........................................................................................................... 34
2.9 Research Model ......................................................................................................... 35
3. Method ..........................................................................................36
3.1 Research Philosophy ................................................................................................. 36
3.2 Research Purpose ...................................................................................................... 37
3.3 Research Approach.................................................................................................... 38
3.4 Research Method ....................................................................................................... 39
3.5 Choice of Theory ....................................................................................................... 40
3.6 Criticism of the Sources ............................................................................................ 42
3.6.1 Time Horizon ......................................................................................................... 43
3.7 Data Collection Method ............................................................................................ 43
3.7.1 Questionnaire.......................................................................................................... 44
3.8 Sample Selection ....................................................................................................... 47
3.9 Pilot Study ................................................................................................................. 48
3.10 Operalization ........................................................................................................... 49

iii
3.10.1 Dependent Variable .............................................................................................. 49
3.10.2 Independent Variable ........................................................................................... 50
3.10.3 Moderating Variable............................................................................................. 50
3.10.4 Control Variables ................................................................................................. 51
3.11 Data Analysis .......................................................................................................... 53
3.12 Reliability and Validity ........................................................................................... 54
3.13 Ethical Consideration .............................................................................................. 55
4. Results and Analysis ....................................................................57
4.1 Descriptive Statistics ................................................................................................. 57
4.1.1 Dependent Variable ................................................................................................ 57
4.1.2 Independent Variable ............................................................................................. 57
4.1.3 Moderating Variable............................................................................................... 58
4.1.4 Control Variables ................................................................................................... 59
4.2 Principal Component Analysis .................................................................................. 60
4.2.1 Dependent Variable ................................................................................................ 61
4.2.2 Independent Variable ............................................................................................. 61
4.2.3 Moderating Variable............................................................................................... 62
4.2.4 Dependent-, Independent-, and Moderating Variable ............................................ 62
4.3 Normal Distribution .................................................................................................. 64
4.4 Spearman Correlation Matrix .................................................................................... 64
4.5 Multiple Linear Regression Analysis ........................................................................ 68
4.6 Hierarchical Moderated Multiple Regression Analysis ............................................ 70
4.7 Hypotheses ................................................................................................................ 73
5. Discussion .....................................................................................74
5.1 Hypothesis 1 .............................................................................................................. 74
5.2 Hypothesis 2 .............................................................................................................. 76
5.3 Other Empirical Findings .......................................................................................... 78
6. Conclusion ....................................................................................80
6.1 Overarching Conclusion ............................................................................................ 80
6.2 Theoretical Contributions .......................................................................................... 82
6.3 Empirical Contributions ............................................................................................ 84
6.4 Practical Implications ................................................................................................ 85
6.5 Limitations and Future Research ............................................................................... 87
6.6 Reflection .................................................................................................................. 90
References ..................................................................................................92

iv
Tables

Table 1- Frequency per Company .............................................................................. 48

Table 2- Statements Professional Scepticism ............................................................. 49
Table 3- Questions CAATs ........................................................................................ 50
Table 4- Statements Trait Scepticism ......................................................................... 51
Table 5- Descriptive Statistics Professional Scepticism ............................................ 57
Table 6- Descriptive Statistics CAATs ...................................................................... 58
Table 7- Descriptive Statistics Trait Scepticism ........................................................ 58
Table 8- Descriptive Statistics Gender, Age .............................................................. 59
Table 9- Descriptive Statistics Organizational Tenure, Professional Tenure,
Partner .......................................................................................................... 59
Table 10- Descriptive Statistics Company ................................................................. 60
Table 11- Rotated Component Matrix Professional Scepticism ................................ 61
Table 12- Rotated Component Matrix Trait Scepticism ............................................ 62
Table 13- Rotated Component Matrix Professional Scepticism, CAATs,
Trait Scepticism ........................................................................................... 63
Table 14- Spearman Correlation Matrix .................................................................... 67
Table 15- Hypothesis 1, Hypothesis 2........................................................................ 69
Table 16- Tests of hypothesis 1.................................................................................. 70
Table 17- Tests of hypothesis 2.................................................................................. 71
Table 18- Hypotheses Overview ................................................................................ 73

Figures

Figure 1- Research Model .......................................................................................... 35

Figure 2- Distribution of Professional Scepticism ..................................................... 64
Figure 3- Standardized Two-Way Interaction Effect Trait Scepticism ...................... 73

Appendix

Appendix I- Questionnaire in Swedish .................................................................... 106

Appendix II- Questionnaire in English .................................................................... 109

v
 1. Introduction

_____________________________________________________________________________________

The introductory chapter will present a background to the research as well as a problem
discussion. Subsequently, the purpose and the research question of the study will be
presented.
______________________________________________________________________

1.1 Background

The audit profession is one of the most fundamental professions and plays a vital role in
society and in global capital markets (IFAC Handbook, 2018a). An auditor’s overall
objectives are the conduct of an audit according to the International Standards on Auditing
(ISA), where the main target is to guarantee that the financial statements are free from
material misstatements (ISA 200; ISA 240; ISA 330). The audit quality indicates the
degree to which the audit ensures that the financial statements are free from material
misstatements, after the finalization of an audit (Wedemeyer, 2010). Auditors are
expected to provide an independent audit review of a company’s operations, which in
turn will provide quality assured information for the external stakeholders (Bierstaker,
Burnaby & Thibodeau, 2001). Aside from providing essential information to both
investors and shareholders, auditors ensure the reliability and reasonability of the
financial statements (Umans, Broberg, Schmidt, Nilsson & Olsson, 2016). Nevertheless,
with the development that digitalization has brought, the risk of fraudulent behaviour has
progressed. Risk of fraudulent behaviour has been the reason for auditors' inability to
discover material misstatements in the financial statements and thus, the inability to serve
the public interest which has during the previous years led to a decline in the public's
trustworthiness towards the audit profession (Carcello, Hermanson & Raghunandan,
2005). Inability to detect fraudulent behaviour has further led to some of the largest
corporate scandals in the 2000s, for example, Enron (2001), WorldCom (2002), and
Lehman Brothers (2008) (Sonu, Ahn & Choi, 2017). The consequences following the
scandals developed several bankruptcies and losses in large financial values, which
further generated criticism towards the audit profession (Broberg, 2013; Carcello et al.,

1
2005). According to Forsberg and Westerdahl (2007), these scandals were evidence of
the fact that auditors gradually moved from protecting the public interest towards
prioritizing the interest of their clients, a situation that threatened the trust in auditors’
judgment.

Auditors across the world are obliged to comply according to the international standards
published by the International Federation of Accountants (IFAC), a worldwide
organization. IFAC publishes various International Standards on Auditing (ISA). One
important part of these standards is the auditor’s professional judgment. ISA 200
paragraph 16 states that “The auditor shall exercise professional judgment in planning
and performing an audit of financial statements”. Professional judgment is one of the
most essential aspects of auditing. It is one of the cornerstones within the audit profession,
what the clients purchase, and what the public expects from an auditor (Cowperthwaite,
2012). Moreover, it is necessary for auditors to make professional judgments to provide
an accurate audit opinion and process. The audit process requires interpretations and
decisions, something that cannot be performed without relevant information about the
client, experience, or knowledge. Auditors with training, knowledge, and experience are
expected to pursue reasonable judgments and hence, have a professional judgment (IFAC
Handbook, 2018b).

Professional judgment is related to the concept of professional scepticism (Nelson, 2009).

Professional scepticism is defined as an attitude that requires an auditor to maintain a
questioning mind and a critical assessment of the audit evidence (Brazel, Jackson,
Schaefer & Stewart, 2016; Nelson, 2009). Both concepts, professional judgment and
professional scepticism, are important for the correct conduct of an audit and high audit
quality (IAASB, 2012). Both researchers (e.g., Nelson 2009) and regulators (ISA 200)
promote the importance of professional scepticism in the audit process (Grenier, 2017;
Hurtt, Brown-Liburd, Earley & Krishnamoorthy, 2013).

Besides the importance of making professional judgments in the audit profession,

Broberg (2013) highlights the essential part of the structure in the audit process. Structure
assists in the conduct of audit opinions, which can be shown as time spent on
documentation (Broberg, 2013). According to Revisorslagen (2001:883) 24 §, auditors

2
are required to document their audit process with information that is important to estimate
the auditors’ impartiality and independence. Broberg (2013) further states that structure
within auditing increases the audit quality. Moreover, the structure within auditing is
important in order for the auditor to be more effective and efficient in their work and is
implemented in the auditing process to control the level of biases (McDaniel, 1990;
Schroeder, Reinstein & Schwartz, 1996). Structure within the audit process can be
described as IT-systems and technology used within the audit profession (Manson,
McCartney & Sherer, 2001). Computer-assisted audit techniques (CAATs) can be
described as the use of technology that supports auditors in the completion of an audit
(Pedrosa, Costa & Aparicio, 2019).

The relationship between structure and judgment is known and discussed in the
accounting literature. Prior studies argue that structure can have both a negative and a
positive impact on professional judgment (e.g. Bierstaker et al., 2001; Kosmala
MacLullich, 2001). Nevertheless, the majority of prior literature argues that structure has
a negative impact on professional judgment (e.g. Cushing & Loebbecke, 1986; Kosmala
MacLullich, 2001; Myers, 1997; Power, 2003). This negative relationship is claimed to
limit auditors’ ability to apply professional judgment (Kosmala MacLullich, 2001).

The profession theory describes auditing as a profession where professional judgment

plays a crucial role in auditors’ work (Agevall & Jonnergård, 2013; Eklöv, 2001). This
theory further highlights the auditors’ expertise (Brante, 1988). This expertise could be
in the form of structure that contains IT-tools and various computer software which
contributes to auditors’ professional knowledge (Öhman, Häckner, Jansson & Tschudi,
2006) that can not be acquired independently (Brante, 1988). Brante (1988) argues that
expertise within auditing, in the form of professional judgment (Eklöv, 2001) and
structure, must continuously be improved in order for auditing to be viewed as a
profession.

Producing comfort is important for auditors since it is the activity where numbers are
converted from an untrustworthy state into a comfortable form (Carrington & Catasús,
2007). In order for auditors to become comfortable in their work and perform high-quality
audits, structure and judgment are two important factors that must be met (Carrington &

3
Catasús, 2007; Pentland, 1993; Power, 2003). Comfort theory provides an understanding
of how comfort relates to professional judgment and how auditors comfort level is
affected by structure. A successful audit indicates that comfort has been reached on
several levels during the audit process (Carrington & Catasús, 2007).

Adrian (2014) highlights that every audit process requires an individual process where
the auditor must assess the data and make professional judgments for each specific case.
This is referred to as the professional judgment, where judgments are based on situational
factors (Robinson, Curtis & Robertson, 2018), however, previous literature also argues
for the impact of individual characteristics on the professional judgment (Broberg 2013;
Humphrey & Moizer, 1990; Power, 2003). These individual characteristics, referred to as
trait scepticism (Quadackers, Groot & Wright, 2014), are compared to situational factors,
more stable and consistent (Hurtt, 2010; Nelson, 2009). Moreover, individuals with
higher levels of trait scepticism are claimed to require more information and evidence in
the audit process, in contrast to those with lower levels of traits (Quadackers et al., 2014).
With this said, since every audit process, in the end, will be affected, not only by the
professional judgment but also by individual traits, it is of interest to investigate whether
the effect of structural domains on the judgment is dependent on auditors’ individual
characteristics, trait scepticism. Therefore, the focus of this paper will not only be placed
on the negative relationship between structure and judgment, represented by CAATs and
professional scepticism, but also on whether trait scepticism moderates this relationship.

1.2 Problem Definition

As we live in a more digitized world, technology plays an important role, impacting many
industries (Kuusisto, 2017). One of the concerned industries is the audit profession, where
digitalization has contributed to a more efficient and effective audit process (Han, Rezaee,
Xue & Zhang, 2016). Technological advancements in auditing are referred to as structure
in the accounting literature (Janvrin, Bierstaker & Lowe, 2009). Structure can improve
efficiency and effectiveness within the audit process, however, it can have both a positive
and negative impact on professional judgment (e.g. Bierstaker et al., 2001; Cushing &
Loebbecke, 1986).

4
Professional judgment is one of the most important aspects of auditing (Broberg, 2013).
Within accounting, professional judgment is exercised in the prediction of conditions and
events, and in situations that have conditions of uncertainty (Eklöv, 2001). Several audit
standards (e.g. ISA 200; ISA 315) highlight the importance of professional judgment, a
fact that indicates the importance of auditors’ professional judgment in the audit
profession (Broberg, 2013). As ISA 200 states, professional judgment must be applied
throughout the audit and documented after the completion of the audit. Moreover,
professional judgment is essential in the matter of risk assessment (ISA 200). However,
structure provided within auditing firms is argued to impact the professional judgment of
auditors (Broberg, 2013). Structure within auditing is usually viewed as technological
advancements such as audit techniques. Checklists, templates, questionnaires and the
audit firm’s work policy are some examples. Since auditors have strong trust in the
auditing firms’ systems and guidelines, the structure has a crucial role during the auditing
process (Broberg, 2013; Pentland, 1993). The situation where the auditor prioritizes
structure within checklists or specific software might lead to the fact that the auditor sets
aside commitments that are relevant for their clients (Kosmala MacLullich, 2001).

Structure and judgment are a well-discussed topic within the audit research (Broberg,
2013; Cushing & Loebbecke, 1986; Kinney, 1986; Morris & Nichols, 1988; Power, 2003;
Schroeder et al., 1996). The development of IT-systems has increased the amount of
structure within the audit process (Agevall, Broberg & Umans, 2018). This increase
makes auditors mechanical in their way of thinking (Broberg, 2013), leading to a negative
impact on professional judgment. Kosmala MacLullich (2001) states that structure
endangers auditors’ ability to execute professional judgment since structure within the
auditing process decides which professional judgments should be made and when. On the
other side of the literature, some authors argue that structure has a positive effect on
professional judgment. Power (2003) states that structure legitimates the auditors’ work.
Moreover, since structure increases the effectiveness and efficiency of the auditing
process (Myers, 1997), auditors have more time to focus on their judgments (Bierstaker
et al., 2001). Further, Cushing and Loebbecke (1986) state that there exists a continuum
between the two concepts.

5
A theory that highlights the importance of judgment and structure within the audit
profession is the profession theory. Judgment is important since it contributes to the fact
that auditing is viewed as a profession (Brante, 1988; Eklöv, 2001). Meanwhile, structure,
usually referred to as the digital tools in auditing, contributes to auditors’ expertise and
professional knowledge (Öhman et al., 2006). Brante (1988) argues that judgment and
structure are two components that make auditors professionals.

For auditors to reach the desired level of comfort, comfort must be achieved in both
structure and judgment (Carrington & Catasús, 2007; Power, 2003). Auditors must
perform the “right things” and do “things right” in order to become comfortable (Broberg,
2013). When auditors aim to do the “right things”, they rely more on the structure.
However, when auditors aim to do “things right”, judgment is the dominant aspect
(Broberg, 2013). However, sufficient levels of comfort must be attained in both structure
and judgment for the auditor to provide a high-quality audit (Broberg, 2013; Carrington
& Catasús, 2007; Pentland, 1993).

Judgment can be represented in the form of professional scepticism (Nelson, 2009).

Nelson (2009) describes professional scepticism as the product of an auditor's judgment.
According to ISA 200 professional scepticism is explained as “an attitude that includes a
questioning mind, being alert to conditions which may indicate possible misstatement due
to error or fraud and a critical assessment of audit evidence”. It is essential to exercise
professional scepticism throughout the audit in order to conduct an audit opinion (Hurtt
et al., 2013; Nelson, 2009). In addition to professional scepticism, auditing standards
encourage usage of CAATs (ISA 315; ISA 330). CAATs are one representation of
structure (Braun & Davis, 2003) and assist auditors in the conduction of an audit through
the extraction and analysis of data from computer applications and software (Pedrosa et
al., 2019). The implementation of CAATs increases auditor’s productivity and has
automated several audit tasks (Curtis & Payne, 2008; Mahzan & Lymer, 2014). CAATs
has made the audit process more automated in its nature where more work is performed
automatically and less manually (Curtis & Payne, 2008; Siew, Rosli & Yeow, 2020). The
automatic process makes auditors less reflective in the audit process (Gilbert, Krull &
Malone, 1990), and more mechanical in their way of thinking (Broberg, 2013). At the
same time, auditing standards require auditors to apply professional scepticism

6
throughout the audit process (ISA 200; ISA 240; ISA 330). Professional scepticism is
especially important in the area of risk assessment and is necessary to improve the audit
quality (ISA 200; Peytcheva, 2014).

In addition to professional scepticism that represents the professional judgment of an

auditor (Nelson, 2009), professional judgment is also argued to be moderated by
individual characteristics (Broberg, 2013; Humphrey & Moizer, 1990; Power, 2003),
known as trait scepticism (Quadackers et al., 2014) or individual traits (Hurtt, 2010). As
an individual characteristic, professional scepticism can be viewed as trait scepticism
used by the individual auditor (Hurtt, 2010). Trait scepticism is the personal difference in
feelings, thoughts, and behaviours that represent the core personality of an auditor (Buss,
1989; Church, 2000; Robinson et al., 2018). Nelson (2009) describes individual traits as
non-knowledge characteristics that can affect the professional scepticism of an auditor.
The personal traits are stable over time and may be difficult to change (Church, 2000;
Robinson et al., 2018). According to Libby and Luft (1993), performed judgments are
dependent on knowledge and traits. Auditors’ personal traits are therefore reflected in
their decisions (Trevino, 1986). Moreover, higher levels of trait scepticism are argued to
be connected to individuals that strive for more information and evidence in the audit
process, in contrast to those with lower levels of trait scepticism (Quadackers et al.,
2014).

Professional scepticism consists of two parts, state scepticism and trait scepticism (Hurtt,
2010). However, other researchers suggest a separation of these two concepts. Robinson
et al. (2018) argue these two concepts could be viewed as two separate constructions due
to the specific nature of state scepticism and the general nature of trait scepticism.
Professional scepticism, as state scepticism, will indicate different levels of professional
scepticism in different situations (Robinson et al., 2018), and is argued to be more
important in the context of professional scepticism (Shaub, 1996). Moreover, state- and
trait scepticism could be viewed separately since state scepticism indicates a greater
response in establishing subjective trust of the client. According to Shaub and Lawrence
(1996), state scepticism contributes more to the applied professional scepticism compared
to trait scepticism. With this said, it is of interest to investigate professional scepticism
and trait scepticism as two separate concepts. Investigation of auditors' professional

7
judgment is relevant in the time since the amount of structure is increasing (Agevall et
al., 2018) as a result of the development in technology (Sutton, 2010) and automatization
in the audit profession (Chan & Vasarhelyi, 2011).

The relationship between structure and judgment has been investigated empirically by
several authors (e.g. Broberg, 2013; Cushing & Loebbecke, 1986; Kinney, 1986; Morris
& Nichols, 1988; Power, 2003; Schroeder et al., 1996). However, previous research
mainly focused on judgment and structure as two broad aspects, without defining a certain
definition. Moreover, it has not been investigated whether this relationship could be
contingent on the individual trait scepticism of an auditor, a different concept, albeit
related to the professional scepticism of an auditor. This study will focus on judgment,
represented by professional scepticism, in relation to structure, represented by CAATs,
moderated by trait scepticism in the context of Swedish authorized auditors.

1.3 Purpose

The purpose of this paper is to investigate whether the relationship between structural
domains represented by CAATs and judgment represented by professional scepticism is
related to auditors’ individual characteristics, trait scepticism.

1.4 Research Question

How does auditor’s trait scepticism relate to the relationship between structural domains
represented by CAATs and professional judgment represented by professional
scepticism?

8
1.5 Outline

The introduction began with presenting the background of the importance of

professional judgment and professional scepticism in auditing. Subsequently, a
problematization followed, where the complex relationship between structure and
Introduction judgment within the audit profession was presented. This ended up in a research
purpose and a research question.

The literature review presents the main underlying theories implemented in this thesis,
which are the profession theory and the comfort theory. Thereafter, every theory is
connected to the main concepts in this thesis; judgment, structure, professional
Literature scepticism, CAATs and trait scepticism, in the context of the Swedish audit firms.
review

This chapter covers the process undertaken to examine the research question and
hypotheses. It displays the research, choice of method and theory, criticism of sources,
time horizon, research strategy, data collection and sample selection. Subsequently, the
Method operationalization of the variables is presented, which is followed by data analysis, the
validity and reliability of the data and lastly ethical considerations.

The results and analysis chapter display the results from the quantitative data which
has been gathered through statistical data analysis of the online questionnaire.
Continuously, the results are analysed and discussed in relation to whether the stated
Results and hypotheses are supported or not.
Analysis

The discussion chapter presents the gathered results in relation to existing literature.

Discussion

The last chapter presents an overall conclusion, followed by the contributions and
limitations of this study. Additionally, suggestions for future research are
presented, the chapter is ended with some reflections concerning this thesis.
Conclusion

9
 2. Literature Review

_____________________________________________________________________________________

This chapter provides a deeper understanding of the subject by presenting relevant

theories of the study. Furthermore, previous research on structure and judgment, with
representations of CAATs and professional scepticism will be presented. Additionally,
explanations of trait scepticism and the audit process will be provided.
______________________________________________________________________

2.1 The Audit Profession and The Profession Theory

Professions and professional work are a commonly discussed field. Today's society
demands the expertise that professionals possess, where a profession is viewed as the
stream of information with expertise (Abbott, 1988; Brante, 2005). Professional work
includes complexity, uncertainty and the obligation of exercising judgment (Brante, 1988;
Freidson, 2001). Professions require trust from the society in the work and the judging
they accomplish (Agevall & Jonnergård, 2013). Accordingly, professional judgment is
one of the most important parts of the audit profession (Eklöv, 2001). Auditing is
classified as a profession since it requires unique knowledge and contains a legitimized
role that differentiates it from other professions (Brante, 2005; Grey, 1998). Auditors are
viewed as professionals since they have a crucial role in society and perform their work
based on scientific knowledge (Brante, 1988). Further, auditors are viewed as neutral
representatives with a high level of expertise and corresponding education (Artsberg,
2003).

The audit profession took form from characteristics in professions such as lawyers and
surgeons that contributed to professionalism (Abbott, 1988). Traditionally, the auditor's
role was to ensure the quality of the audited financial statements (Öhman, 2005). Today,
this role also entails a commitment towards the client and a desire to provide additional
value through the service (Herda & Lavelle, 2013). Expectations that are placed on the
audit profession result in high requirements on auditors independence and integrity (Elg
& Jonnergård, 2011). Independence and integrity are especially of importance in

10
situations that require the auditor to make judgments (Öhman, 2005). Auditors along with
lawyers, engineers and doctors, are typically regarded as professions that are dependent
on the trustworthiness of the society.

Auditing is a regulated profession (Öhman et al., 2006), nevertheless, auditing is based

on professional judgments (Eklöv, 2001). This can be seen in e.g. ISA 200 and ISA 315
that require auditors to exercise professional judgment. Auditors with training, knowledge
and experience are expected to exercise professional judgment (IFAC Handbook 2010).
Beside exercising professional judgment, it is important that auditors follow laws and
regulations within the profession to maintain their professionalism (Brante, 2009).
Auditors themselves believe that the reason why auditing is viewed as a profession is
because of the unwritten action norms placed on the profession (Artsberg, 2003). The
impact of profession theory on the audit profession can also be seen in the placed
requirements on the auditors’ expertise. Expertise within the audit profession must
continuously be improved to regard auditing as a profession in accordance with the
profession theory (Brante, 1988). Abbott (1988) argues that in order to be a professional,
one must have the expertise that cannot be acquired independently. Increase in structure,
as a result of the development of IT-tools, requires auditors to implement and learn
various computer software, checklists and new routines to make judgments (Öhman et
al., 2006).

Profession theory contributes to the understanding of attributes, characteristics and

structure of professionals (Brante, 1988). Profession theory is relevant in this study since
auditing is classified as a profession where auditors’ work is based on professional
judgments. Further, it is relevant to implement this theory since structure and judgment
contribute to the professional development and expertise of an auditor, which makes
auditors professionals. Finally, the presentation of profession theory will provide an
explanation and a structure of the audit profession.

11
2.2 Comfort Theory

Comfort can be produced both externally and internally, where the internal comfort refers
to what the auditor experiences during the audit (Carrington, 2014). Producing comfort
is one of the main objectives of an auditor. Production of comfort is an activity that
converts numbers from an untrustworthy state into a comfortable form for both auditors
and the public (Carrington & Catasús, 2007; Pentland, 1993). Kosmala MacLullich
(2003) states that auditing is about making the auditor comfortable with the numbers. In
order to be comfortable, the auditor must be confident on how the audit is performed and
by whom (Carrington & Catasús, 2007; Power, 2003). Comfort is not only the desired
outcome of an audit, but it is also the state that is being produced during the entire audit
process (Carrington & Catasús, 2007; Pentland, 1993). The reached level of comfort is
dependent on the different participants and the composition of the audit process. A
successful audit effort means that the auditor has attained comfort on several levels. When
these comfort levels are reached, the auditor is able to provide an audit opinion
(Carrington & Catasús, 2007).

Structure and judgment are important in order for auditors to become comfortable in their
work performance and to perform high-quality audits (Broberg, 2013; Carrington &
Catasús, 2007; Pentland, 1993; Power, 2003). Broberg (2013) explains that to become
comfortable, the auditor must perform its work correctly and focus on the right tasks.
When auditors aim to do their work correctly, they appear to rely more on the structure.
However, when auditors focus on the right tasks, judgment appears to be the dominant
aspect (Broberg, 2013).

To reach comfort, the auditor must work “with and through structure” (Carrington &
Catasús, 2007, p.45). The use of structure in the audit process is a greatly appreciated tool
to avoid discomforts and instead produce comfort (Carrington & Catasús, 2007). The
structure facilitates the audit process and provides comfort for the auditor in simpler tasks
(Myers, 1997). Öhman et al. (2006) describe that auditors rarely question structure since
it might hinder their ability to reach the desired comfort level. In addition to working
“with and through structure” the auditor must also exhibit its personality, integrity and
experience to reach comfort (Broberg, 2013). An auditor’s personality and judgments
determine which tasks that will be performed to achieve comfort. Moreover, the auditor’s

12
preference for a certain work also implies more comfort for the auditor (Carrington &
Catasús, 2007). Further, more complex tasks require higher levels of professional
judgment to reach comfort (Eilifsen, Messier, Glover & Prawitt, 2014). This is especially
important since the professional judgment of an auditor affects the audit quality (Broberg,
2013).

Important to highlight is that the auditor must attain a sufficient level of comfort in both
structure and judgment to provide a high- quality audit (Broberg, 2013; Carrington &
Catasús, 2007; Pentland, 1993). Comfort theory is important in this study since it provides
an understanding of how a level of comfort relates to the professional judgment of an
auditor and how the auditor’s comfort level is affected by structure. Further, this theory
will provide an understanding on whether implementation of CAATs makes auditors
more comfortable in their work and thus, whether less professional scepticism is applied.
The comfort theory will provide a deeper comprehension in how comfort affects the audit
profession and affects the relationship between judgment and structure.

2.3 Structure and Judgment

2.3.1 Structure

Cushing and Loebbecke (1986) define structure as: “a systematic approach to auditing
characterized by a prescribed, logical sequence of procedures, decisions and
documentation steps, and by a comprehensive and integrated set of audit policies”.
Structured activities within the audit profession refer to activities that are rule-based and
require some kind of routine (Power, 2003). In structured activities, the auditor focuses
on performing “things right” and not performing the “right things” (Öhman et al., 2006).
According to Power (2003), the “scientistic” assumption of the structure is described as
algorithmic decision aids that are encoded from a logical series of steps. In this way, the
structure represents a universal audit through a system of rules (Power, 2003). Lastly,
structure is defined as control and legitimacy (Power, 2003).

Structure is often viewed as formal decision aids, checklists and mandated procedures,
and is often computer-based (Knechel, 2007). The checklists are often pre-printed where
computer packages, such as audit program preparations, are designed to assist in auditors'

13
judgments (Prawitt, 1995). According to Cushing and Loebbecke (1986), the structure
includes organizational arrangements and technology, which involves both audit tools
and decision aids. Technology within the audit profession consists of audit software and
systems which are implemented to help the auditor in the conduct of an audit (Broberg,
2013; Pedrosa et al., 2019).

Bhattacharjee and Moreno (2002) explain that structure is especially important for less
experienced auditors that are more impressionable in their judgments. It is common that
new auditors in the field are introduced to the profession through a highly structured
working process. This assists the new auditors in developing a critical mind and helps
them in their daily tasks. The structure also assists the more experienced auditors that
control that the work is performed correctly. Structure enhances audit quality and
efficiency (Dillard & Bricker, 1992) since it will give the auditor more time to focus on
more complex tasks (Bierstaker et al., 2001). Audit firms that implement structure design
their IT-systems to enforce their methodology and promote consistency across
engagements. Moreover, these enforcements are achieved through automated decision
support, automated integration and automated tailoring (Teeter, Alles & Vasarhelyi,
2010).

The audit process is a structured way of formalized steps that leads to an audit opinion
(Carrington, 2014; Cushing & Loebbecke, 1986). Activities in the audit process that
require routine are for example checklists (Kosmala MacLullich, 2001), which provides
the auditor with detailed comprehensive guidance (Smith, Fiedler, Brown & Kestell,
2001). Other activities are documentation and administration (Broberg 2013). The audit
process is becoming more standardised, which according to Knechel (2013) means an
increase in structure. Development of technology and increase in IT-tools within the audit
profession are seen as the largest reasons for this increase. (Abdolmohammadi, 1999;
Sutton, 2010; Öhman et al., 2006). Some software performs the work completely
automatically and does not require an auditor to generalize data. However, software that
performs more complex activities might require the auditor to be engaged in the activity
(Abdolmohammadi, 1999). More structured software increases audit effectiveness and
efficiency by automatically implementing data in the engagement file. This is made
through, for example, when risks are identified in the planning stage, they are

14
automatically implemented in the execution stage of the audit process. This guarantees
the risk assessment (Carson & Dowling, 2012).

Previously, the larger audit firms could be divided according to their working processes
into structured, unstructured or semi-structured firms (Kinney, 1986). However, more
recent studies argue that these differences have been reduced and that the larger audit
firms could be viewed as semi-structured (Broberg, 2013; Smith et al., 2001).

2.3.2 Judgment

Professional judgment is the foundation of the audit profession (Öhman et al., 2006) and
one of the most important aspects of auditing (Broberg, 2013). According to Downie and
Macnaughton (2009, p.323), judgment is “an assertion made with evidence or good
reason in a context of uncertainty”. Professional judgment can further be seen as the
auditor’s knowledge, experience and ability to separate important information and upon
that information make decisions (Agevall et al., 2018). According to IFAC (2010),
auditors with high training, experience, and knowledge are expected to provide
appropriate judgments. Further, professional judgments are needed in order to adjust the
audit plan accordingly to the client’s conditions and requirements (Dirsmith &
McAllister, 1982). As stated in ISA 200, “Professional judgment is essential to the proper
conduct of an audit. This is because interpretation of relevant ethical requirements and
the ISAs and the informed decisions required throughout the audit cannot be made
without the application of relevant knowledge and experience to the facts and
circumstances.” Auditors make many decisions based on their judgment, some of which
are: a) assessment of risk of material misstatements in the financial statements, b)
construction of an opinion on the financial statements, c) evaluation of management’s
judgments in implementing the company’s applicable financial reporting framework, and
d) evaluation of audit evidence to device the audit quality (ISA 200: A23; Wedemeyer,
2010).

Professional judgment is a reflection made by auditors who use various audit techniques
(Broberg, 2013). However, it is not only the audit techniques that develop the auditor’s
judgment, the social context also has an impact. Auditors can reach their judgment

15
through communication, for example, with their colleagues (Solomon, 1987).
Professional judgment is created through several assessments that arose during the audit
process. An assessment can be explained as a statement based on factual considerations
(Öhman et al., 2006). Moreover, Popova (2012) states that professional judgment can be
viewed as a subjective perception created through different types of assessments. These
judgments are based on the auditor’s knowledge and its intuition made through its
scepticism (Popova, 2012). Kosmala MacLullich, (2001) highlights the importance of
applying professional judgment throughout the whole audit. It is necessary that auditors
execute professional judgment in order to provide a correct audit opinion. Carrington
(2014) strengthens this argument by arguing that professional judgment must be, to some
extent, included in all levels of the audit process. The judgment is based on activities such
as materiality, internal control but also the choice between continuous inspection and
acceptance. When enough audit evidence is collected, the auditor concludes their
judgments in an audit opinion.

2.3.3 Structure and Judgment

The relationship between judgment and structure is complex and determining the roles of
these aspects can be challenging (Agevall et al., 2018; Power, 2003). The structure-
judgment debate has been an ongoing topic in the accounting literature for a longer period
of time. Nevertheless, Agevall et al. (2018) argue that this debate is more relevant than
ever because of the increased structure in the audit profession. Regulations require
auditors to document their work which has resulted in many audit firms implementing
digital tools and manuals to simplify and improve the audit process. It could also be
argued that structure has been used and developed in the audit firms to reach control
(Power, 2003) and comfort (Broberg, 2013). These developments have raised one
interesting question, whether structure limits auditors’ judgments (e.g. Agevall &
Jonnergård, 2007; Kosmala MacLullich, 2001; Power, 2003; Schroeder et al., 1996).

Auditing is explained as judgmental in its nature where “judgments are made in tacit and
intuitive processes” (Eklöv, 2001, p.62). These processes are resistant to systematization
(Eklöv, 2001). At the same time, the existing guidelines executed by ISA are targeted
towards more structure and less judgment (Öhman et al., 2006). Power (2003) explains

16
that it might be difficult for an auditor to implement a high level of structure in the audit
process and at the same time create space for their professional judgments. Further,
Kosmala MacLullich (2001) argues that structure in the audit process endangers an
auditor’s ability to execute professional judgments. This is since structure guides the
auditor in when to make judgments and what judgments to make (Kosmala MacLullich,
2001).

Structured firms are relying on predetermined audit programs, statistical sampling,

analytical models and structured internal controls (Kinney, 1986; Schroeder et al., 1996;
Kosmala MacLullich, 2001). This leads to a more predetermined audit plan and process.
When the audit process is highly dependent on structure, auditors can get mechanical in
their way of thinking and acting, which can reduce auditors’ professional judgment
(Broberg, 2013). This can also lead to auditors ignoring important information that is not
included in the audit plan (Myers, 1997). Thus, structured firms that rely more on
evidence provided in the audit plan rather than on their professional judgment can end up
with more misstatements (Schroeder et al., 1996). Audit firms that rely on structural
elements tend to concentrate their audit on areas that are familiar and concrete. This might
lead to auditors focusing more on quantitative information rather than on qualitative
information (Broberg, 2013). Auditors are expected to execute more qualitative
assessments (Kosmala MacLullich, 2001), however, at the same time there is an increase
in guidelines and regulations that auditors have to follow (Agevall et al., 2018). Ignoring
qualitative assessment and evidence might jeopardize the professional judgment of an
auditor which means that an efficient audit cannot be performed (Kosmala MacLullich,
2001).

However, structure does not necessarily have to end or reduce the judgment. Kosmala
MacLullich (2001) explains that it might rather reallocate the judgment and assist it in the
right direction within the audit process. Structure provides guidelines and works as a
benchmark for actions, nevertheless, it leaves the final decisions for the individual
judgment of an auditor. Further, Kosmala MacLullich (2001) argues that it is the
judgment of the auditors that will make a decision whether the structure reflects correct
information in the financial statements. Stringer (1981) explains that technology
contributes to well-structured processes that increase the audit quality and decrease

17
occurrences of misstatements, assisting auditors' judgment in the right direction.
Bierstaker et al. (2001) confirm this statement by claiming that the increase in structure
as a result from online audit systems is going to free auditors from several activities and
allow them to concentrate more on judgments that each individual client requires. Finally,
an increase in structure decreases the number of unnecessary procedures (Cushing &
Loebbecke, 1986).

Despite the debate on whether structure increases or decreases judgment, there is also
another view on the relationship between these concepts. Broberg (2013) argues that
auditors make structured judgments, which means that they must be structured in their
way of performing judgments. Meaning that these two concepts should not always be
seen as two separate methods, rather they should be seen as complementaries to each
other. Further Broberg (2013) claims that in order for an auditor to establish themselves
in the audit profession they must be able to balance between structure and judgment. A
balance between these two concepts is important to execute a good audit (ICAEW, 2006).
Moreover, it provides auditors with the ability to understand the essentiality of the audit
(Öhman et al., 2006). More structured firms are especially concerned with maintaining
balance (Power, 2003).

In contrast to the view by Broberg (2013) where structure and judgment are seen as
complementaries to each other, Keen (1999) views these concepts as two opposite poles
on a continuum. Where audit firms that implement structure tend to require the use of
statistical sampling and formal scoring sheets, but also rules in perceiving the audit test
results. Meanwhile, unstructured firms emphasize the need for individual judgments
(Kinney, 1986). Keen (1999) terms the use of structure and judgment together as quasi-
rationality and further argues that different tasks contain different compositions of
intuitive and analytical thoughts. Meaning that different audit tasks are allocated at
different points on the continuum (Keen, 1999). Despite the fact that the relationship
between structure and judgment remains unclear (Agevall et al., 2018), the majority of
the accounting literature argues that structure endangers the implementation of judgment
(e.g. Kosmala MacLullich, 2001; Myers, 1997; Schroeder et al., 1996).

18
2.4 Audit Process

The audit process is a set of procedures and actions that are implemented to review a
company. Auditors’ use the audit process to review that the processes and controls of the
business operate correctly and that the financials of the company are in order (FAR,
2006). Structure has made it possible to collect and interpret large amounts of data more
effectively and efficiently (Shumate & Brooks, 2001). Structure within the audit process
is increasing along with the development of IT-systems which creates a more routine
procedure of the audit process (Manson et al., 2001). Accordingly, with the increase of
structure, there are increasing requirements on auditors to exercise professional judgment
and apply a professional scepticism throughout the whole audit process (Kosmala
MacLullich, 2001). A failure of applying a sufficient amount of judgment might lead to
the risk of an improper audit opinion (Sayed Hussin, Iskandar, Saleh & Jaffar, 2017).
Judgment in the audit process combines estimations and evaluations of outcomes and
leads to decisions that auditors have to make (Kosmala MacLullich, 2001).

The audit begins when the client develops the financial statements and makes certain
assertions of the numbers. The assertion could, for example, be that the management
asserts that the revenues in the financial statements are complete or that a certain amount
of costs exists (Guénin-Paracini, Malsch & Paillé, 2014). Every audit is performed
differently since the undertaken actions will be dependent on the risk factors and
effectiveness in the client’s internal control system (Sayed Hussin et al., 2017). The
auditor must, during the entire audit process, identify that the client’s financial statements
are free from any material misstatements due to fraud. Moreover, evaluation of fraud and
fraud risks must be considered during all stages of the audit process (Sayed Hussin et al.,
2017). The audit process consists of several activities that are executed by auditors to
obtain evidence in order to provide an audit opinion (Guénin-Paracini et al., 2014). Audits
are performed annually and are viewed as the exercise of looking backwards (Rezaee,
Sharbatoghile, Elam & McMickle, 2002). The audit process consists of 3 stages:
planning, execution and reporting (FAR, 2006).

19
2.4.1 Planning

The planning stage in the audit process can be viewed as an ongoing procedure. This is
since unexpected situations or information can appear, causing auditors to rethink or
change the audit strategy (FAR, 2006). Establishment of an audit plan is a requirement
according to ISA (e.g. ISA 300; ISA 315). The objective of the planning stage is to decide
the amount and what kind of evidence that is going to be reviewed. These plans should
be based upon information regarding the client’s operations (Guénin-Paracini et al.,
2014). Appropriate planning is crucial since it provides auditors with the ability to
investigate risky areas (FAR, 2006). Further, appropriate planning helps to create the
audit strategy but also form, identify and handle risks in a timely way so that the audit
can be performed both efficiently and effectively (ISA 200). Failure of performing
sufficient planning can lead to mistakes in the audit opinion or result in lack of time to
perform the audit.

Judgment is especially important in the planning stage of the audit process (Nelson,
2009). Professional judgment is particularly important in this stage since the auditors
must allocate audit hours to the various audits and their elements (Rodgers, Mubako &
Hall, 2017). Structure is implemented in the planning stage for the use of checklists that
are executed to guide the auditors throughout the audit process (Cushing & Loebbecke,
1986). The structure for each specific audit is set in the planning stage and is established
so the audit process is completed in an effective and efficient manner (Bierstaker et al.,
2001).

2.4.2 Execution

The execution stage consists of substantive testing, extensive tests of controls and
transactions, and examination of the client’s management administration (Carrington,
2014). The auditor investigates the client’s business functions, payables, finance, human
resources, investments, purchases, inventory management functions, and their revenue
(FAR, 2006). The auditor must also control the existence and completeness of the client’s
inventory (Janvrin et al., 2009). According to Pan and Seow (2016), the auditor must
verify that the information provided from the client reflects the reality.

20
A test of controls investigates the effectiveness of the client’s internal controls (Desai,
Desai, Libby & Srivastava, 2017) and ensures that the data is not misrepresented (ISA
200). The auditors need to obtain an in-depth understanding of the company's internal
control (ISA 315), and guarantee that the functions are successfully performed (Desai et
al., 2017). Tests of controls and transactions can be done through sampling, where less
than a percent of a population is tested. Sampling is the most effective method for testing
transactions (Colbert, 2001). Substantive tests are performed to obtain audit evidence
regarding certain assertions (Appelbaum, Kogan & Vasarhelyi, 2017) and are made to
detect material misstatements in the financial statements (ISA 200). Rezaee, Elam and
Sharbatoghlie (2001) state that the aim of performing substantive tests is to control
financial accounting validity and existence. One part of substantive testing is the testing
of journal entries, where the auditor’s capability to identify fraud is dependent on whether
he or she has access to all journal entries and other adjustments from the concerned period
(Fay & Negangard, 2017).

Structure in the execution stage has increased the amount of collected data and helps to
analyze the collected data properly. The structure increases the ability to get a deeper
understanding of the client’s operations (Kokina & Davenport, 2017). Moreover, the
structure in the execution process can help the auditor to detect material misstatements
and reduce human errors (Issa, Sun & Vasarhelyi, 2016; Knechel, 2007).

2.4.3 Reporting

At the end of the audit, the auditor is expected to provide an audit opinion regarding the
financial statements (ISA 700). The auditors summarize the collected audit evidence and
provide an explanation of their work and observations (Omoteso, 2012). In the audit
report, the auditors should make a statement whether they “recommend” or “not
recommend” the establishment of the financial statements. This statement should be made
based on whether the profit is used according to the management report, and whether the
CEO and the board are free from liabilities (FAR, 2006). Lastly, the auditor must decide
on how to proceed with the collected information and take actions based on his or her
judgment. Further, judgment is crucial in the conclusion on whether the financial

21
statements show a correct view (Kosmala MacLullich, 2001). The auditor can issue four
different audit reports; unmodified, modified, adverse and disclaimer. An unmodified
report indicates that the financial statements are free from material misstatements,
meanwhile a disclaimer report indicates the opposite (FAR, 2006).

2.5 Professional Scepticism as a Representation of Judgment

Professional scepticism is one aspect that represents professional judgment and is

described as the product of the auditor’s judgment (Nelson, 2009). Professional judgment
and professional scepticism are essential in the audit profession (Hurtt et al., 2013).
According to ISA 200 paragraph 13, professional scepticism is “an attitude that includes
a questioning mind, being alert to conditions which may indicate possible misstatement
due to error or fraud and a critical assessment of audit evidence”. Moreover, Nelson
(2009, p.1) describes the concept as “indicated by auditor judgments and decisions that
reflect a heightened assessment of the risk that an assertion is incorrect, conditional on
the information available to the auditor”. Professional scepticism is one of the substantial
concepts in auditing practice (Hurtt, 2010), and is according to IAASB (2018) necessary
to achieve a high-quality audit.

Professional scepticism is important in the detection of unethical behaviour by the client’s

management (Grenier, 2017). Professional scepticism must be applied to be able to
question the reliability of collected information and audit evidence (ISA 200). Moreover,
professional scepticism is considered to be a fundamental element in the financial
statement audit (Quadackers et al., 2014). Auditors should plan and perform an audit with
professional scepticism to identify eventual material misstatements in the financial
statements (ISA 200). Insufficient levels of professional scepticism in the financial
statements can lead to the failure of detecting risks (Beasley, Carcello & Hermanson,
2001), which can result in a decrease of the audit quality (Sayed Hussin et al., 2017).
Carpenter and Reimers (2013) state that when auditors apply professional scepticism,
they are both effective and efficient in their fraud investigations.

Professional scepticism can be described through the neutral view and the presumptive
doubt view (Nelson, 2009). The neutral view is explained as when the auditor assumes

22
the representation of the management to consist of no bias (Nelson, 2009; Popova, 2012).
Through implementing the neutrality perspective, the auditor aims for a balance of the
evidence that both supports and refutes the financial statements assertions (Quadackers
et al., 2014). According to Cushing (2000), the auditor should be unbiased when forming
their beliefs, meaning that there should be no bias in an either positive or negative
direction. Moreover, Nelson (2009) explains the presumptive doubt perspective as an
auditor’s attitude of expecting some level of bias or dishonesty in the management
presentations until the opposite is being proved. When conducting the audit, the auditor
should have a mindset that a possibility of material misstatements due to fraud could be
present (Nelson, 2009). Thus, the presumptive doubt perspective puts the auditor’s focus
on error-related evidence rather than on non-errors, e.g. changes in business conditions
(Quadackers et al., 2014). Further, when adopting the presumptive doubt perspective, the
minimum level of evidence needed to provide an audit opinion increases (Nelson, 2009).

2.5.1 State Scepticism

Hurtt et al. (2013) present a six characteristics model for professional scepticism. This
model is developed to measure the professional scepticism of a person. Nevertheless,
Robinson et al. (2018) argue that this model must be viewed as two parts where one part
is state scepticism (a temporary condition caused by situational factors) and the other one
is trait scepticism (stable characteristics of an individual). Where state scepticism is
measured as the three characteristics Questioning Mind, Suspension of Judgment and
Search for Knowledge. Meanwhile, the other three characteristics (Interpersonal
Understanding, Self-Determining and Self-Confidence) refer to trait scepticism,
individual characteristics of a person (Hurtt et al., 2013; Robinson et al., 2018).

In prior literature (Anderson, Kadous & Koonce, 2004; Gramling, 1999; Hackenbrack &
Nelson, 1996; Hirst, 1994; Houston, 1999; Robertson, 2010; Trompeter, 1994),
professional scepticism is seen as either trait scepticism, state scepticism or both.
Robinson et al. (2018) argue in their study that state scepticism is a separate construction
from trait scepticism because of the specific nature of state scepticism compared to the
general nature of trait scepticism. Professional scepticism as state scepticism indicates
that some situations might warrant a higher level of professional scepticism compared to

23
other situations (Robinson et al., 2018). Additionally, Shaub (1996) argues that trait
scepticism is not as important as state scepticism in the context of professional scepticism.
This is since state scepticism shows a greater response in determining subjective trust of
the client. State scepticism also shows a larger contribution to the applied professional
scepticism (Shaub & Lawrence, 1996).

State scepticism is a formable, temporary condition that emerges from situational factors
(Hurtt et al., 2013; Steyer, Schmitt & Eid, 1999). Comprehension of state scepticism is
necessary in order to get an understanding of the interplay of environmental factors,
professional scepticism and the behaviour of the auditor (Robinson et al., 2018).
According to Steyer et al. (1999), state scepticism means that behaviour is dependent on
specific conditions in each situation. The clients’ incentives affect the situational factors
and further the auditors’ judgment and behaviour (Robinson et al., 2018). Moreover,
Robinson et al. (2018) argue that state scepticism functions as a transition step between
the situational factors and the sceptical behaviour of the auditor. Sceptical behaviour is
adjusted by the nature of the situation in the audit. For example, when the risk of material
misstatement is higher, the level of professional scepticism is higher (Robinson et al.,
2018). Further, the professional scepticism is expected to increase in situations where the
client is new, when the communication is poor, when the client experiences financial
distress and when inaccuracies appear in the client’s inventory (Shaub & Lawrence,
1996).

2.5.2 Trait Scepticism

Despite the fact that professional scepticism and judgment are affected by situational
factors (Robinson et al., 2018), they are also influenced by the individual characteristics
(Broberg 2013; Humphrey & Moizer, 1990; Power, 2003). Hurtt et al., (2013) refer to the
individual characteristics as individual traits. According to Quadackers et al., (2014) they
can also be referred to as individual trait scepticism. Traits are defined as individual and
relative stable differences in thoughts, feelings and behaviour and are described as the
centre of personality (Robinson et al., 2018). Since individual traits affect judgment and
decisions (Humphrey & Moizer, 1990; Power, 2003), auditors with higher levels of trait
scepticism would usually require more evidence to be convinced compared to auditors

24
with lower levels of trait scepticism (Quadackers et al., 2014). Rose (2007) argues that
auditors with higher levels of trait scepticism increase their search in attendance of fraud
conditions compared to auditors with low levels of trait scepticism. The difference in the
levels of trait scepticism can be reduced through audit training (Rose, 2007).

2.5.3 Professional Scepticism in The Auditing Process

Professional scepticism must be maintained through the planning and executive stage of
the audit process (ISA 200). In the audit process, the auditor must obtain an understanding
of the client and the company’s operations to make assessments regarding existing risks.
In order to make a critical assessment of the validity of the audit evidence, it is necessary
that the auditor executes professional scepticism (Broberg, 2013). By executing
professional scepticism, the auditor will question the reliability of the audit documents
and other information obtained during the audit process (ISA 200).

An auditor must execute professional scepticism throughout the audit process to identify
and assess risks of material misstatements, originated from fraud or errors (Nelson, 2009).
Prior literature argues that risk assessment and audit planning are related to each other
(Kaplan, 1985; Libby, 1985; Nelson, 2009). Professional scepticism in the planning stage
is important since it can affect the initial planning of a client and further affect the audit
opinion (Nelson, 2009). The overall evaluation of the client’s trustworthiness is
performed in the planning stage which is made through investigating the company’s
control environment (Shaub, 1996). Since auditors decide what type of audit evidence to
collect in the planning stage (Guénin-Paracini et al., 2014), professional scepticism must
be applied in order to produce a relevant audit plan (Hurtt et al., 2013). If the client's risk
assessment is low during the planning stage, auditors’ professional scepticism will most
likely decrease in the executive stage of the audit process (Hurtt et al., 2013).

In the executive stage of the audit process, professional scepticism is essential in order to
be critical of the audit evidence (ISA 200). Auditors are required to reevaluate the risk
level during the whole audit process to ensure that an appropriate level of professional
scepticism is applied towards the collected audit evidence (Glover & Prawitt, 2014). What
is described as an appropriate level of professional scepticism depends on the specific

25
audit situation that the auditor is involved in (Glover & Prawitt, 2014). This level should
further be applied in the executive stage to achieve a high-quality audit (Glover & Prawitt,
2014; Hurtt et al., 2013).

In the reporting stage, professional scepticism is important to not generalize the evidence
when making conclusions from the audit observation (ISA 200). Due to this, professional
scepticism is an important factor in the decision-making and in order to conclude an audit
opinion (Rodgers et al., 2017). In conclusion, professional scepticism is fundamental for
the audit work when considering fraud risks of material misstatements (Nelson, 2009).

2.6 CAATs as a Representation of Structure

Computer-assisted audit techniques (CAATs) are one representation of structure and can
be defined as the major technological advancements and tools within auditing (Al- Hiyari,
Said & Hattab, 2019). The use of CAATs has evolved over time as the use of technology
has developed within the audit profession (Ramamoorthi & Weidenmier, 2004).
Development of information technology, modern computing technology, and a globally
and competitive market, drive together with the change towards a more automated audit
(Al-Hiyari et al., 2019; Mahzan & Lymer, 2014). Many audit firms have opted to use
sophisticated IT-tools and information techniques in order to develop their audit
processes as well as improving their activities within the audit process. This increases the
need for CAATs to continue to review and monitor tasks effectively and work in an
innovative way (Ramamoorthi & Weidenmier, 2004).

Braun and Davis (2003) define the broad definition of CAATs as techniques that help
auditors in the conduct of an audit. CAATs can further be explained as computer
techniques that derive and analyze data from computer applications (Braun & Davis,
2003; Pedrosa et al., 2019), or as the use of specific software that can be implemented by
the auditor to complete audits (Curtis & Payne, 2008; Janvrin et al., 2009; Siew et al.,
2020). CAATs consist of several audit techniques that auditors can implement in their
work. Voyager, IDEA, and ACL are a few software that the auditor can use to facilitate
their work and make it more effective due to its automatization (Coman, Coman &
Munteanu, 2018). However, Microsoft Word and Excel are the two most common

26
techniques that are applied by audit firms. Excel is the most frequently used tool within
audit processes and is applied to sort clients’ financial data (Widuri, O’Connell & Yapa,
2016).

Implementation of CAATs is encouraged by auditing standards (ISA 330) since it

increases the effectiveness and efficiency of auditors’ work (Bierstaker, Janvrin & Lowe,
2014). According to prior literature (Bierstaker et al., 2001; Braun & Davis 2003; Siew
et al., 2020), auditors should also take advantage of CAATs in order to remain relevant
and competitive on the market. The use of CAATs provides several benefits compared to
traditional audit (Al- Hiyari et al., 2019). First, CAATs increase auditors’ productivity
and also the audit function (Zhao, Yen & Yapa, 2004). Furthermore, CAATs have
automated manual audit tests which reduce hours spent on an audit, where CAATs allow
auditors to test an entire population leading to higher quality audit evidence (Bierstaker
et al., 2014; Curtis & Payne, 2008). In addition to productivity, CAATs improve the audit
quality and efficiency of the audit process, since it allows auditors to directly investigate
evidence that is saved in electronic form (Janvrin et al., 2009; Pedrosa et al., 2019). These
advantages are especially important for audit firms since they are facing increasing
expectations from their clients (Al-Hiyari et al., 2019).

Additionally, CAATs can be used by auditors as a part of their routine to process audit
significance data in a company’s information systems (Bierstaker et al., 2014; Singleton
& Flesher, 2003). Some types of CAATs that are commonly used by auditors contain the
following groups: general audit software, electronic working papers, fraud detection,
continuous monitoring, audit reporting, computer-based training, network security
testing, databases of prior audit, and internet security (Coman et al., 2018). In addition,
previous literature has shown that auditors implement CAATs to perform various
functions. Some of these functions are the following: testing of program controls (Janvrin
et al., 2009), to increase the comprehension of their IT controls, promote risk assessment
during the audit process (Mahzan & Lymer, 2014) and to advance the efficiency of audit
testing (Coman et al., 2018). It can be explained as that CAATs provide the foundation
for automated auditing instruments (Al-Hiyari et al., 2019; Zhao et al., 2004).

27
According to Janvrin et al. (2009) and Siew et al. (2020), the use of CAATs is more
common among larger audit firms (e.g. Big 7), rather than the smaller audit firms. The
reason for this is that larger audit firms are more likely to audit larger clients who use
more complex IT systems (Curtis & Payne, 2008; Janvrin et al., 2009). Moreover, larger
audit firms have greater resources to educate and support their employees in the use and
implementation of CAATs (Bierstaker et al., 2001; Janvrin et al., 2009). According to
Siew et al. (2020), education within CAATs improves the competence within technology,
leading to more knowledge and experience within IT-tools. Moreover, younger
employees show higher knowledge within CAATs and various computer skills compared
to older workers (Meyer, 2009). Meanwhile, older workers are less likely to implement
computer-assisted techniques (Friedberg, 2003; Schleife, 2006), which Meyer (2009)
argues depends on the fact that older professionals are more resistant to innovation and
computer techniques.

2.6.1 CAATs in the Auditing Process

The implementation of CAATs in the audit profession can be seen on many different
levels and has changed the nature of the auditing process (Bierstaker et al., 2001). The
use of CAATs has changed the auditing process from being performed manually into
being automatically performed (Pedrosa et al., 2019; Al- Hiyari et al., 2019). CAATs are
encouraged to be used throughout the audit process to evaluate risk of material
misstatements due to fraud (Janvrin et al., 2009; Teeter et al., 2010). In addition,
Bierstaker et al. (2014) argue that through implementing CAATs, auditors are able to
better respond to the increase in fraud risk. This is since the use of CAATs increases the
amount of evidence that can be tested in the account of interest.

Auditors must begin the audit planning by understanding the clients’ objectives and
subsequently establish whether these objectives have been included in the client’s
process. In addition to this, the auditor must also evaluate the risks and internal controls
of the client in the planning stage (Bierstaker et al., 2014; Mahzan & Lymer, 2014). One
of the aspects where auditors implement CAATs is in the obtaining of internal control
templates of a specific client in order to identify the client’s strengths and weaknesses
(Bierstaker et al., 2001; Teeter et al., 2010). This obtainment is made to produce an audit

28
plan and later to determine whether all significant risks have been identified throughout
the audit process (Teeter et al., 2010). Further, this action identifies any missing controls,
assesses the inherent risk and also produces specific audit tests that must be performed
during the ongoing audit process (Braun & Davis, 2003; Mansour, 2016). Another
advantage of using CAATs in the planning stage is that auditors worldwide have the
possibility to contribute with their knowledge and expertise since the software makes the
information accessible wherever and whenever (Pedrosa et al., 2019).

In the executive stage, CAATs are implemented in several areas to collect audit evidence
(Bierstaker et al., 2001; Janvrin et al., 2009). CAATs are used to evaluate inventory
existence, completeness, and trends through investigating purchases, sales, and
manufacturing (Bierstaker et al., 2001). CAATs are also used to identify journal entries
and other adjustments to be tested (ISA 330; Janvrin et al., 2009; Teeter et al., 2010).
Moreover, CAATs are recommended in the investigation of the accuracy of electronic
files and re-performance of procedures, e.g. ageing of accounts receivable (Teeter et al.,
2010). According to Janvrin et al. (2009) and Bierstaker et al. (2014), CAATs are further
preferable to implement when choosing sample transactions that are going to be audited
through electronic files, arrange the transactions of specific characteristics, receive audit
evidence regarding the effectiveness of controls, and to test the entire population instead
of only samples. Due to the ability to test an entire population, the reliability of the audit
conclusions is increasing (Curtis & Payne, 2008).

Lastly, CAATs have improved detection of fraud. By implementing audit software in the
audit process, 100 percent of the data can be tested and CAATs can scan for duplicates
and fictitious data (Bierstaker et al., 2001; Pedrosa et al., 2019). CAATs can be used to
investigate high-risk transactions and search for unusual items to find eventual material
misstatements due to error or fraud (Bierstaker et al., 2014; ISA 330). Detection of fraud
is also done through reviewing journal entries, where CAATs, especially in the use of
IDEA, is particularly effective (Fay & Negangard, 2017).

29
2.7 Professional Scepticism and CAATs

ISA 315 and ISA 330 encourage auditors to implement CAATs in order to increase the
efficiency and effectiveness of the audit process. The increase in audit efficiency and
effectiveness is important due to the heightened responsibility in detecting fraud (Janvrin
et al., 2009). This has made the audit process change in its nature and become a more
automated process, where more tasks are performed automatically resulting in less
manual work (Al-Hiyari et al., 2019; Curtis & Payne, 2008). The implementation of
CAATs permits auditors to increase their productivity and also the audit function
(Pedrosa et al., 2019). In addition, implementation of CAATs has led to auditors being
liberated from less complex audit tasks and instead provides the ability to focus on more
complex tasks, such as understanding the client’s business and various risks (Bierstaker
et al., 2001). Previous literature has shown that auditors adopt CAATs to perform various
tasks, e.g. to test program controls (Javnrin et al., 2009; Pedrosa et al., 2019), or to
improve the efficiency of the audit testing (Coman et al., 2018). Accordingly, CAATs are
argued to be a crucial tool for auditors in the performance of their work.

However, at the same time, auditing standards require auditors to apply professional
scepticism. Professional scepticism must be applied throughout the audit process and is
especially fundamental in risk assessment (ISA 200; ISA 240; ISA 330). Applying
professional scepticism is further important within the audit profession when evaluating
audit evidence with a sceptical mind (Peytcheva, 2014). In order to improve audit quality,
auditors must be sceptical of their own judgments and also towards the audit evidence
(Peecher, Solomon & Trotman, 2013). Peytcheva (2014) states that when a higher level
of professional scepticism is applied, more focus is attributed to fraud evidence leading
to a higher fraud assessment. Auditors emphasis of professional scepticism is important
to effectively and efficiently identify relevant fraud risk but also for the choice of a
relevant audit plan (Carpenter & Reimers, 2013).

According to Grenier (2017), auditors are more likely to address professional scepticism
towards manually performed tasks rather than automatically performed tasks. This is
since scepticism is related to effortful and conscious processing (Grenier, 2017).
Automatic decisions function outside conscious awareness (Bargh & Chartrand, 1999;
Bargh, Gollwitzer, Lee-Chai, Barndollar & Troetschel., 2001; Chartrand & Bargh, 1996),

30
which results in the fact that auditors become less reflective on automatically processed
audit evidence (Gilbert et al., 1990). Since the manual process is more conscious,
deliberate and effortful than an automatic process, auditors experience better self-insight
regarding manual processing (Peytcheva, 2014).

Without professional scepticism, the auditor might fail in its ability to discover fraud or
identify red flags in the client’s operations (Broberg, 2013; Kosmala MacLullich, 2001).
Red flags include factors that increase the chance of material misstatements and
indications that the financial statements might contain material misstatements. Hence, the
auditor might make wrong decisions from the audit evidence. Nevertheless, applying too
much scepticism will make the auditor approach each audit with a high level of suspicion,
investigating every transaction as potential fraud and therefore, potentially never be able
to complete any audit (Kosmala MacLullich, 2001). Thus, the level of professional
scepticism that auditors apply in the audit should be appropriate in order to retain a high
quality of judgment (Glover & Prawitt, 2014).

The complexity of IT-tools and technology within the audit profession implies that audit
tasks are becoming more complex (Kosmala MacLullich, 2001). Therefore, audit firms
argue that structured audits assist them in their work and in the understanding of the
complexity within the tasks. The increase of structure in the audit process (Knechel, 2013)
forces audit firms to impose restrictions on professional scepticism (Francis, 1994).
Structured methods and approaches like checklists and pre-established audit plans,
described as CAATs (Pedrosa et al., 2019), are implemented in order to provide audit
services and remain competitive in the market (Al- Hiyari et al., 2019). Bierstaker et al.,
(2001) argue that this fact affects both the judgment and the scepticism of the auditor
since it reduces the capacity to decide the extent and implementation of the IT-tools.

Auditing standards, as well as auditing research, promote the implementation of CAATs

to obtain efficiency (Bierstaker et al., 2014; ISA 330; Janvrin et al., 2009; Pedrosa et al.,
2019). At the same time, CAATs are contributing to the fact that auditors’ scepticism and
reflection on automated evidence is being affected (Bargh & Chartrand, 1999; Bargh et
al., 2001; Chartrand & Bargh, 1996). Accordingly, this effect might, in the end, effect the
audit quality (Peytcheva, 2014).

31
2.7.1 Hypothesis 1

Increasing reliance on CAATs will have a negative relationship with professional

scepticism in the audit process.

2.8 Individual Trait Scepticism

Agevall et al. (2018) have in a recent study investigated professional judgments within
the audit profession. Auditing is a regulated profession, which is dependent on many
guidelines, laws, and terms, nevertheless, it is the individual judgment that in the end will
make the foundation for decision making (Agevall et al., 2018). Previous research within
psychology has shown that an individual’s nature and qualities affect judgment and
decisions (Quadackers et al., 2014). Since the individual interpretation and judgment
differs from other people's interpretation and judgment, professional judgments will, in
the end, be affected by the individual characteristics of a person (Broberg, 2013;
Humphrey & Moizer, 1990; Power, 2003).

According to Nelson (2009), auditors individual characteristics are important factors to

predict sceptical judgments and actions. Therefore, an auditor that is more sceptical
should also be more critical in his or her judgments than an auditor that is less sceptical
in its nature (Quadackers et al., 2014). Further, Nelson (2009) argues that these
characteristics are stable at the point of time when the auditor starts his or her career. This
description is confirmed by Hurtt (2010), who states that individual traits that affect the
professional scepticism of an auditor are based on individual characteristics, which are
both stable and consistent. According to the somewhat stable existence of individual
characteristics, individual traits develop slowly over time and can be hard to change
(Robinson et al., 2018).

As stated previously, Robinson et al. (2018) modified the six characteristics model by
Hurtt (2010) and argued that three of the characteristics are based on individual factors,
rather than situational factors: Self-Determining, Interpersonal Understanding and Self-
Confidence. Robinson et al. (2018) argue that these three characteristics are strictly
related to the trait aspect of scepticism and do not change depending on the context or
situation compared to state scepticism. Individual traits influence judgment and decision

32
making (Robinson et al., 2018), where the effect is especially strong in high-risk settings,
for example, fraud risk areas (Das & Teng, 2004). Individuals with low levels of trait
scepticism perceive others as more trustworthy and are therefore expected to be more
trusting of others (Cushing, 2000; Shaub, 1996; Quadackers, Groot & Wright, 2009).
Meanwhile, auditors with higher levels of trait scepticism have better sensitivity towards
aggressive reporting than auditors with low levels of trait scepticism. This means that
auditors who are more sceptical in nature are more suspicious of their clients and might
initially see them as untrustworthy. If an auditor is suspicious in nature, it means that he
or she is more likely to make more sceptical judgments and decisions (Shaub, 1996). Rose
(2007) argues that suspicious auditors are more likely to assume fraud, which Quadackers
et al. (2009) identify as a characteristic for having higher individual traits. Under either
neutrality or the presumptive doubt perspective, an auditor with higher levels of traits
would generally require more evidence to be confident of their matter. However, with
more presumptive doubt, the auditor focuses more on fraud or on the evidence of material
misstatements. On the other hand, when adopting a neutral view, the auditor is going to
support audit evidence as well as reject it (Quadackers et al., 2009).

The implementation of CAATs has decreased the amount of manual work since more
tasks are being performed automatically (Curtis & Payne, 2008; Pedrosa et al., 2019). As
a result of the automatically processed audit evidence, auditors become less reflective in
the audit process (Gilbert et al., 1990). Further, it makes auditors more mechanical in their
way of thinking (Broberg, 2013), having a negative impact on professional scepticism
(Fischer, 1996). However, auditors with higher levels of trait scepticism are assumed to
be more suspicious in nature (Rose, 2007), and are therefore more likely to exercise a
sceptical behaviour (Hurtt, Eining & Plumlee, 2008). This means that through applying
higher levels of trait scepticism, the auditor is more likely to increase their search for
information and improve their evidence assessments (Hurtt, 2010). This can be shown in
the specific procedure of substantive testing. CAATs are implemented to perform
substantive testing automatically, which is made to obtain audit evidence (Appelbaum et
al., 2017). By applying higher levels of trait scepticism, auditors will exhibit more
sceptical judgments when performing substantive testing (Nelson, 2009). This makes
auditors with higher trait scepticism more likely to investigate audit evidence with a more
sceptical mind compared to those with lower trait scepticism (Nelson, 2009). This will

33
further increase the amount of identified errors and auditors desire to perform additional
testing (Quadackers et al., 2009). Moreover, the desire to perform additional investigation
improves auditors’ ability to test existing evidence effectively (Quadackers et al., 2009).

The fact that individual traits, trait scepticism, affects professional scepticism (Hurtt,
2010), is confirmed by Nelson (2009) who promotes individual traits as a crucial
determinant of behaviour. This means that in addition to situational factors (Robinson et
al., 2018), auditors' professional scepticism is also influenced by the individual trait
scepticism. Accordingly, this means that to what extent professional scepticism is
affected by CAATs (Bierstaker et al., 2001) should be dependent on the individual trait
scepticism. Since auditors with higher levels of individual traits increase their sceptical
behaviours (Hurtt et al., 2008) and suspicion (Rose, 2007), trait scepticism should have a
positive moderating effect on the negative relationship between CAATs and professional
scepticism. This leads to the second hypothesis:

2.8.1 Hypothesis 2

Individual trait scepticism will positively moderate the negative relationship between
CAATs and professional scepticism.

34
2.9 Research Model

The key concepts of this thesis are professional scepticism, CAATs and trait scepticism.
The concept of CAATs is tested to what extent it relates to professional scepticism. This
relationship is further tested to see if trait scepticism could have a positive moderating
effect on this relationship. This is further illustrated in the model below, see figure 1.

H1
Computer- assisted audit techniques Professional Scepticism

(CAATs)

H2

Trait Scepticism

Figure 1- Research Model

35
 3. Method

_____________________________________________________________________________________

This chapter will start with an introduction of research philosophy, research purpose and
research approach. This is followed by the presentation of the chosen method and theory.
A critical analysis of the used literature will be displayed under criticism of sources.
Consequently, the data collection method will be demonstrated, followed by sample
selection and pilot study. Thereafter, operalization of the variables will be presented, this
section is followed by an explanation of how the data is analyzed. Lastly, the validity and
reliability of the data are presented, the chapter is ended with ethical considerations.
______________________________________________________________________

3.1 Research Philosophy

Research philosophy refers to the beliefs and assumptions regarding the development of
knowledge in a specific field. Research philosophy includes important assumptions about
how the researchers perceive their surroundings and how these assumptions support
chosen research strategy and methods (Saunders, Lewis & Thornhill, 2016). It is
important to be aware of the chosen research philosophy since it will have a significant
influence on what the researcher does and how the researcher understands what is being
investigated (Crossan, 2003; Saunders et al., 2016).

One aspect of the research philosophy is positivism. The positivism philosophy refers to
working with observable social realities to generate law-like generalisations. A positivist
researcher should use existing theories to develop hypotheses (Saunders et al., 2016). This
study implements the profession theory since auditing is viewed as a profession.
Profession theory assists in the understanding of the audit profession and the explanation
of the role of judgment and structure in auditing. Secondly, comfort theory is
implemented since it provides an understanding of how auditors need to reach a certain
level of comfort in order to provide an audit opinion. Moreover, auditors need to be
comfortable with both the output from CAATs and their professional scepticism in order
to provide a high-audit quality. A deeper understanding for the audit profession and the

36
effect of comfort will help in the investigation of the two hypotheses in the study; (H1):
Increasing reliance on CAATs will have a negative relationship with professional
scepticism in the audit process, and (H2): Individual trait scepticism will positively
moderate the negative relationship between CAATs and professional scepticism.

Moreover, as a positivist, the researcher should try to remain as neutral as possible

towards the collected data in order to remain objective. This means that a positivist
researcher collects data that is based on his or her assumptions, nevertheless, remains
neutral in the analysis of the data (Johnson & Clark, 2006; Ryan, 2018). The fact that the
researchers are unable to affect the results from the primary data will remain their
objectivity. In order to investigate the hypotheses, the collected data is based on the
assumptions in this research. Since the researchers are not present during the collection
of the data, the data will not be biased or affected in any direction. Analysis of the data is
performed in accordance with the positivist view since statistical tests decide what is
significant or not, which remains neutrality throughout the analysis. In conclusion, this
study implements existing and well-known theories to develop hypotheses and therefore
applies the positivism view of research philosophy.

3.2 Research Purpose

The purpose of this study is to explain the relationship between structure, represented as
CAATs, and judgment, represented as professional scepticism under the condition of
auditors’ individual traits. The study is built upon the research question: How do auditors’
individual traits relate to the relationship between structural domains and professional
judgment?

According to Saunders et al. (2016), there exist three main classifications of a research
purpose, namely exploratory, descriptive and explanatory. Investigation of a situation or
a problem in order to explain the relationship between two or more variables is described
as an explanatory study (Saunders et al., 2016). Explanatory studies have been used to
explain complex systems within the fields of business, urban planning and public policy
(Fisher & Ziviani, 2004). Additionally, explanatory research is known for establishing a
“causal relationship between variables” (Saunders et al., 2016, p.176). Accordingly, this

37
study applies an explanatory approach since the purpose is to explain how the moderating
variable, trait scepticism, relates to the relationship between the dependent variable
professional scepticism and the independent variable CAATs. Fisher and Ziviani (2004)
argue that studies, where the background literature provides a clearer direction towards
the research purpose, can be defined as explanatory. This study is built upon the
background of each variable, leading to the last variable, individual traits, where the
research purpose becomes clear and concrete. Implementing the explanatory approach
further provides flexibility, where Fisher and Ziviani (2004) highlight this as an ability to
discover and investigate in the case selection. These statements confirm the explanatory
nature of this study since the aim is to study a situation in order to explain the relationship
between three variables.

3.3 Research Approach

There are several research approaches that researchers need to consider, a deductive
approach, an inductive approach but also a combination of these, an abductive approach
(Saunders et al., 2016). The deductive approach views the relationship between theory
and research, and is explained as the researcher, based on existing theories, form
hypotheses that later will be empirically examined (Bryman & Bell, 2015). Since the
research model in this thesis is based on already existing literature and furthermore tests
these existing theories and the relations between various variables, this study adopts a
deductive approach. A deductive approach includes a process in which theory leads to
specific findings. Meaning that this approach explores well known and existing theories,
and tests whether these theories are valid in specific situations (Bryman & Bell, 2015). A
deductive research approach is used in this thesis because it fits well with the purpose of
this study as it is aiming to explain and provide a deeper understanding of the existing
relationship between structure and judgment, and how it will be affected by auditors’
individual traits. This will bring a new and deeper understanding of the causal relationship
between the existing concept. Moreover, the deductive research approach permits the
author to test existing theories through hypotheses (Bruce, 2006). This will provide a
more standardized and objective outcome of the research. The deductive approach is
typically associated with positivism and is often measured through a quantitative method
(Bryman & Bell, 2015). Given the fact that this study implements a quantitative method

38
to collect primary data, objectivity will remain throughout the writing process. After the
collection of data, an analysis will be performed and a conclusion on that analysis will be
established. This corresponds with the description of the deductive approach provided by
Aneta and Jerzy (2013), who state that deduction consists of making conclusions from
what is known. Lastly, the deductive approach fits well in this study since a quantitative
method is used where developed hypotheses, based on existing theories, are tested.

3.4 Research Method

The aim of this study is to explain the relationship between CAATs and the auditors’
professional scepticism, and whether this relationship is affected by the auditor’s
individual characteristics, trait scepticism. This relationship is explained and tested
through two hypotheses. Bryman and Bell (2015) promote the quantitative approach for
studies that have a relationship between theory and research where hypotheses are tested
through existing theories. For this study, a quantitative method, rather than a qualitative
method is chosen, due to the deductive approach where hypotheses are tested based on
existing theories, profession theory and comfort theory. Further, this study is based on an
existing relationship, which according to Bryman and Bell (2015), suits better with a
quantitative method rather than a qualitative method. By implementing a quantitative
research method, a larger amount of data can be collected in a shorter period of time
which is more time-efficient and effective (Bryman & Bell, 2015). Since there exist
approximately 2,800 authorized auditors in Sweden, a quantitative research method is
most suitable in order to get a more holistic view which can be representable for the whole
population. Saunders et al. (2016) promote this as an increase in the generalisability of
results. Besides, compared to the qualitative method, the quantitative method decreases
the possibility of various interpretations among academics (Bryman & Bell, 2015).
Quantitative research is most known for the measures and transformation of data to
numbers, which allows researchers to explain, present and investigate relationships in the
trends that appear in data. Quantitative research is also known for the importance of
validity and reliability, statistical analysis of data, generalisability, and objectivity
(Robson, 2002). A disadvantage with the quantitative method is that it limits the contact
between the researcher and the respondents. This reduces the possibility to extend the
knowledge and the ability to ask further questions (Bryman & Bell, 2015). Nevertheless,

39
Johnson and Clark (2006) argue for the implementation of the quantitative method in
positivist research where the data collection is focused on numbers. Östlund, Kidd,
Wengström and Rowa-Dewar (2011) argue that a quantitative method is especially
suitable in studies that perform a survey. With that said, despite the fact that the
quantitative method contains a few disadvantages it is the most suitable method in this
specific study since it fits well with both the research philosophy and the research
approach.

3.5 Choice of Theory

The underlying concepts in this thesis are audit profession, professional scepticism,
CAATs, and trait scepticism. In order to understand the relationship between those
concepts, the following two main theories are implemented: the profession theory and
comfort theory. The profession theory is applied in this thesis because it explains that
auditing is a profession and also what specific factors that make auditing a profession.
Profession theory contributes in the comprehension of characteristics and attributes of
professionals, including auditors (Brante, 2005). It further explains that higher
requirements are placed on auditors, both in the sense of independence and judgments
(Elg & Jonnergård, 2011). Further, this theory provides an understanding of the
importance of the constant update and development within auditing (Brante, 1988), which
can be referred to CAATs. This is since the use of CAATs is important in order to remain
competitive (Zhao et al., 2004). Lastly, this theory is relevant since it explains the
relevance of structure and judgment in the aspect of the professional development of an
auditor, which makes auditors professionals.

Comfort theory is implemented in this thesis because it assists in the comprehension of

how a certain comfort level will contribute to higher-quality audits. Comfort is explained
as an activity where an auditor transforms information from an untrustworthy state into a
comfortable form (Carrington & Catasús, 2007). Comfort theory states that auditors must
be comfortable in their work to be able to provide an audit opinion. Moreover, to provide
an audit opinion, auditors must be comfortable with both their execution of professional
scepticism and the provided output from CAATs (Broberg, 2013). Öhman et al. (2006)
state that auditors rarely question the structure since it might limitate them to reach the

40
desired comfort level. However, at the same time, auditors are required to exhibit their
personality and judgments to achieve the desired level of comfort (Carrington & Catasús,
2007). Subsequently, comfort theory is implemented to provide an understanding of how
auditors comfort level is affected by structure and whether the implementation of CAATs
makes auditors more comfortable in their work. This theory is further contributing to the
assumed negative relationship between CAATs and professional scepticism since a
higher reliance on CAATs is argued to reduce auditors professional scepticism. Thus,
implementing comfort theory will assist in the investigation of the relationship between
CAATs and professional scepticism, which will further provide guidelines in the
investigation of how auditors individual traits might affect this relationship.

This thesis could have implemented the positive accounting theory (PAT). This theory is
trying to predict and explain, instead of prescribe, the accounting choices that are made
by managers (Watts & Zimmerman, 1986). However, this theory is not used since it
mainly refers to the field of accounting rather than auditing. Moreover, this thesis could
further have chosen the utility theory because it explains how individuals make their
decisions. However, this theory is not implemented since it mainly focuses on the
behaviour of an individual and its preferences (Kapliński, 2013). As this thesis views the
relationship between structure and judgment as negative rather than a complementary or
a continuum of these two factors where auditors can make a preference, this theory does
not fit into this research. Additionally, this study could have chosen the theory of planned
behaviour since it explains the relationship between attitude and behaviour. However, this
study is not used since it mainly focuses on consumer behaviour and not organizational
behaviour (Ajzen, 1991). Moreover, this theory also uses past experience as an important
factor. Since this thesis looks at CAATs, which is a digital tool that is continuously
developing, it could be argued that past experience within CAATs would not provide a
fair representation of its usage, since one specific software could have undergone several
improvements during a few years.

41
3.6 Criticism of the Sources

The research began by exploring the existing literature. The database of Jönköping
University, Primo, and the database of Google Scholar were used to find relevant articles
to be included in this study. The thesis also includes a few books, all of which were
collected from the library at Jönköping University. Business- and science articles are used
in the introduction in order to demonstrate and present the subject and its relevance. This
study is based on existing literature and theories which provides the importance to use
prior and well-known academic literature within the research field of this thesis. Articles
used in the literature review are peer-reviewed, majority of which are included in journals
in the 2018’s ABS-list. The purpose of the ABS Academic Journal Guide is to rate the
journals according to their quality. This means that the majority of the articles included
in this thesis are top-journals or highly ranked according to their quality. Regarding
articles used in the literature that are not included in the ABS-list, each of them is peer-
reviewed, which means that the quality of the article is assessed and reviewed before it is
published in a scholarly journal.

Bryman and Bell (2015) argue for the importance of a critical approach in the collection
of articles. Applying critical thinking is crucial when analyzing, explaining and
evaluating (Pucer, Trobec & Zvanut, 2014). Accordingly, applying a critical mind is
important in the examination of articles. Bryman and Bell (2015) further highlight the
importance of the quality in the articles, which can be reduced the more references an
article goes through. In order to decrease this risk, articles have been compared to their
original source.

In order to find relevant and useful articles, various keywords were adopted. These
keywords were used both individually and in combination with each other. The most
commonly used keywords in this research are:

Audit profession, Auditing, Professional scepticism, Judgment, Structure, CAATs,

Individual traits.

42
3.6.1 Time Horizon

The purpose of this thesis is to explain the relationship between two variables and how
this relationship might be dependent on another variable. This study adopts a cross-
sectional design. This design allows the collection of data at a single point in time to
collect quantitative data in relation to two or more variables (Bryman & Bell, 2015).
Cross-sectional designs are often referred to as social survey designs, which is closely
connected to questionnaires. The cross-sectional design is preferable for surveys, but also
other methods, e.g. structured observations and diaries (Bryman & Bell, 2015). In
addition, Bryman and Bell (2015) argue that a cross-sectional design is most suitable for
studies that are performed in a limited amount of time, which is true for this thesis since
it is written in approximately 16 weeks. The cross-sectional design is further appropriate
for researchers investigating variation (Bryman & Bell, 2015), which is the current case
since this study is investigating more than one case. Studies applying a cross-sectional
design are more likely to meet variation (Bryman & Bell, 2015). The given design is
appropriate for this thesis, nevertheless, a disadvantage with a cross-sectional design is
that it does not present specific patterns (Bryman & Bell, 2015). Implementing a
longitudinal design would have provided certain patterns. Correspondingly, cross-
sectional research shows an absence of internal validity (Bryman & Bell, 2015).

3.7 Data Collection Method

According to Saunders et al. (2016), there exist several research designs that can be
implemented for a study with an explanatory purpose. The different existing designs are
action research, archival research, ethnography, case study, grounded theory,
experimental study and survey study (Saunders et al., 2016). According to Saunders et al.
(2016), a survey is often associated with the deductive nature of a study. Moreover, a
survey is most preferable when analysing a certain population in a specific time period
(Saunders et al., 2016). Implementation of a survey to gather primary data allows larger
amounts of data to be collected in a more time-efficient and effective way (Bryman &
Bell, 2015). A survey fits well in this thesis since a larger amount of data can be collected
and investigated. This will be conducted during a short time period of two weeks. The
use of a survey makes it possible for the researchers to ask the same questions to all
participants and further get a holistic view of the population (Bryman & Bell, 2015).

43
Accordingly, this study investigates approximately 2,800 authorized auditors where the
implementation of a survey contributes to a more holistic view since exactly the same
questions are asked to all participants.

One disadvantage with surveys is that a deeper understanding cannot be obtained since
no additional questions can be asked to the participants (Bryman & Bell, 2015). However,
when implementing a survey, the collection of answers will remain unbiased and
objective, since the researchers cannot control the questions in any direction. Moreover,
a survey is performed anonymously, which will improve the honesty and accuracy of the
answers (Bryman & Bell, 2015). This will allow the concerned auditors in the study to
answer anonymously and guarantee more honesty in their responses compared to other
methods, e.g. interviews, where the researcher is present. With that said, a survey is the
most suitable method for this thesis.

3.7.1 Questionnaire

This study implements a self-completion questionnaire as a method to collect electronic

data. A self-completion questionnaire is a questionnaire where the participant answers the
questions without the presence of the researchers (Bryman & Bell, 2015). The chosen
method contains both advantages and disadvantages. When conducting a self-completion
questionnaire, the researchers are not present during the execution of it since the
questionnaire can be completed when the respondent prefers to. This means that the
questions are not asked differently, in any different order and are not controlled in any
way by the researchers (Bryman & Bell, 2015). It can, therefore, be argued that the
questionnaire contributes to the objectivity of the researchers.

A disadvantage with the implementation of a self-completion questionnaire is that no

additional data can be collected. Therefore, the researchers must ensure that the asked
questions will provide all information needed to answer the research question before it is
transmitted to the participants. Moreover, there is a greater risk of missing data with the
use of a questionnaire, for example, the participant can miss to answer a question,
intentionally skip to answer a question or does not understand the meaning of the question
(Bryman & Bell, 2015). With that said, there is a risk that the answers received might not

44
be valid and therefore cannot be used in the research. However, the biggest advantage of
conducting a self-completion questionnaire is the number of participants that can be
included in the survey. By performing a self-completion questionnaire, larger quantities
of a population can be investigated which will provide the study with a more accurate
view of the total population (Bryman & Bell, 2015). Moreover, a questionnaire is more
time-efficient to administrate in the manner of compiling larger amounts of collected data
(Bryman & Bell, 2015), which is important for this study because of the large selected
sample size.

The questionnaire was conducted through the website Qualtrics, a program provided by
Jönköping University. Qualtrics is user friendly, both for the respondent of the
questionnaire but also the creator, which in this case are the researchers of the study. By
providing a simple design, it is easier for the participants to understand the structure of
the questionnaire which makes it easier to answer the questions. Moreover, the use of
Qualtrics makes it comfortable for the researchers to transfer the answers to the statistical
program, SPSS.

The questionnaire consists of 31 statements where the first four statements refer to the
control variables: age, years within the organization, years within the audit profession and
whether the participant is a partner. Statements 5-23 are based on the Hurtt’s model
(2010), which was originally created to measure professional scepticism. Nevertheless, a
more recent study by Robinson et al. (2018) argues that this model measures both trait
scepticism and state scepticism, a reason why this study adopts the latest view of the
modified model by Hurtt (2010). Thus, the six characteristics provided by Hurtt (2010)
are divided into trait scepticism and state scepticism. Statements 5-13 refer to auditors’
individual characteristics, trait scepticism, and represent the moderating variable in the
research. These statements are based on the three characteristics: Self-Determining,
Interpersonal Understanding and Self-Confidence. Statements 14-23 in the questionnaire
represent the dependent variable, professional scepticism. These statements are based on
the other three characteristics: Questioning Mind, Suspension of Judgment and Search for
Knowledge. The modified model by Robinsson et al. (2018) consists of five statements
per characteristic, however, to increase the response rate, these statements are further
modified to consist of three statements per characteristic.

45
The last eight questions, question 24-31, represent CAATs which is the independent
variable. These questions are based on the study by Janvrin et al. (2009) who investigate
auditors’ acceptance of CAATs. In their study, they present areas within the audit process
where auditors are most likely to implement CAATs in their work. Thus, questions
regarding reliance on CAATs within the specific areas: testing of samples, evaluation of
inventory existence and completeness, identifying journal entries, internal controls and to
evaluate fraud risks are selected. Moreover, questions regarding reliance on CAATs in
the different steps within the audit process (planning, execution and reporting stage) are
also formulated in order to investigate in which stages auditors tend to rely the most on
CAATs.

The Likert scale was developed by the psychologist Rensis Likert (Seashore & Katz,
1982) and is used to measure the participants' attitudes, opinions and perceptions when
using a questionnaire (Wakita, Ueshima & Noguchi, 2012). The participants of this study
got to answer questions and statements based on a ten-point Likert scale where 1 equals
strongly disagree and 10 equals strongly agree. The statements regarding trait scepticism
and professional scepticism are originally based on a seven-point Likert scale. However,
to increase the variation in the answers among the participants, the Likert scale was
modified into a ten-point Likert scale. This modification was also made because an even
scale will force the participant to take a stand in the statements since they cannot choose
to be neutral (Saunders et al., 2016).

The investigated sample in this study is consisting of auditors working in Sweden, a

translation of the questionnaire was therefore made into Swedish. This was done to
increase the response rate of the questionnaire and to avoid misinterpretations, especially
concerning terms, such as CAATs and aspects where it is used. Moreover, a translation
makes it easier for the participants to interpret and answer the questionnaire since it is
provided in their main language. Translation of the questionnaire was performed by the
authors of this study and confirmed by the supervisor to ensure the maintenance of the
original context of the questions.

46
The questionnaire was provided through an email to all authorized auditors in Sweden.
Since all authorized and approved auditors in Sweden are members of FAR, their email-
addresses are registered on FAR’s website. Approximately 2,800 email-addresses exist
on FAR’s website. The questionnaire was distributed with a cover letter where a
description of the study’s purpose was described. The questionnaire was distributed on
the 16th of March and a reminder was sent out on the 20th of March. On the 27th of
March, the questionnaire closed and a total of 522 answers were collected (278 answers
before the reminder). This provides the study with a response rate of 18.6%. However, of
these 522 answers, some responses were incomplete, where an answer with completeness
below 71% was erased. This results in 435 usable answers for the study. The
questionnaire can be found in Appendix I (Swedish version) and II (English version).

3.8 Sample Selection

Defining a sample selection for a questionnaire contains a few problems, one problem is
the availability of the sample (Bryman & Bell, 2015). In this thesis, the sample selection
consists of all authorized and approved auditors in Sweden, where the population are all
authorized auditors across the world. A population should contain all units from which
the sample will be selected, where the sample is a segment from the population that is
selected for exploration (Bryman & Bell, 2015). This is fulfilled in this thesis since the
authorized auditors in Sweden make a segment of all authorized auditors across the world.
Selection of authorized auditors in Sweden as the sample is most suitable since this study
is performed in Sweden and the authors writing this study speak Swedish. A translation
to other languages would be time demanding, which is not appropriate in this time-limited
thesis. Further, a translation could not be guaranteed to be 100% correct since available
tools such as Google Translate would have been used to assist the translation.

Swedish authorized auditors were chosen as the research sample since it was desired that
the auditors have a long experience within the field and deeper knowledge and
understanding of auditing. Authorization guarantees an auditor’s knowledge and
experience within the field of auditing (Law, 2014), and is the reason why this study
investigates authorized auditors in particular. The data was gathered from all audit firms
in Sweden that have authorized auditors that have registered their email-address at FAR.

47
This means that the research sample contains auditors from both larger audit firms, e.g.
The big 4 firms (Ernst & Young, Deloitte, KPMG and PwC) but also smaller audit firms
e.g. BDO, Grant Thornton, Mazars, Frejs Revisorer. Bryman (2011) argues that it is
important that the research sample represents different ages and positions within the firm,
which is also crucial to consider in a questionnaire. Since the research sample in this study
covers all authorized auditors in Sweden, it has captured various ages and positions.

Company Frequency
PwC 16.1%
EY 11.7%
Deloitte 3.0%
KPMG 1.1%
Mazars 1.6%
BDO 5.3%
GT 7.1%
Others 54.0%
Table 1- Frequency per Company

3.9 Pilot Study

The aim of pretesting the questionnaire is to clarify that the respondents do not experience
any problems with the questions and statements. It also reduces the risk of confusion in
the design, the questions and the time constraints (Saunders et al., 2016). A pilot testing
was performed in this study on four auditors, where they were asked to simply perform
the questionnaire and provide their feedback. A pilot test should provide an understanding
of how long it takes to perform the questionnaire, the construction of the statements, the
respondent’s ability to understand and interpret the statements, clarity of instructions and
finally, if something was unclear and complex to answer (Saunders et al., 2016). The pilot
study provided an ability to modify the statements once more. Most of the feedback
concerned the construction of the statements where all four auditors felt they were quite
repetitive. This is since the original model by Hurtt (2010) contains both regular and
reversed statements. The reversed statements were modified to regular statements and the
repetitive ones were eliminated. This reduces confusion and results in fewer statements
which are more appealing to respondents since it will take less time to perform the
questionnaire.

48
3.10 Operalization

3.10.1 Dependent Variable

Professional Scepticism - Was measured by using a ten-item modified scale adapted from
Robinson et al. (2018) that was originally developed by Hurtt (2010) to measure
participants' professional scepticism. This is done through a ten-point Likert scale (1=
Strongly disagree, 10= Strongly agree). Hurtt’s scale (2010) has been adopted in prior
research to measure trait scepticism, nevertheless, Robinson et al. (2018) argue that
approximately half of the statements refer to state scepticism, professional scepticism.
The view of Robinson et al. (2018) is adopted in this study. In this questionnaire, the
statements measuring the three characteristics representing professional scepticism
(Questioning Mind, Suspension of Judgment and Search for Knowledge) were reduced
from 14 questions to 10 statements. Reducing the length of the questionnaire can
potentially increase the response rate. Further, the participants were asked to think of the
most complex case during the past when ranking the statements. The modified and final
scale on professional scepticism includes the following statements:

While working on that case, I tended to question the statements that I received
Questioning Mind

QM1 from the company

1= strongly disagree and 10= strongly agree
(QM)

While working on that case, I frequently questioned the things that I saw or read
QM2
1= strongly disagree and 10= strongly agree
While working on that case, I tended to reject statements unless I had proof that they were true
QM3
1= strongly disagree and 10= strongly agree

During that case, I did not like to take decisions until I had a chance to look at all
SJ1 the available information
Judgment (SJ)
Suspension of

1= strongly disagree and 10= strongly agree

While working on that case, I did not like having to make decisions quickly
SJ2
1= strongly disagree and 10= strongly agree
While working on that case, I liked to ensure that I considered most available information
SJ3
1= strongly disagree and 10= strongly agree
SJ4 While working on this case, I waited to make decisions until I could get more information
1= strongly disagree and 10= strongly agree

While completing that case, I actively sought out all the information that I could
Search for Knowledge

SK1
1= strongly disagree and 10= strongly agree
While working on that case, I searched for more evidence to improve my chances of getting
SK2 the correct answers for the case
(SK)

1= strongly disagree and 10= strongly agree

While working on that case, I used all resources available to me to get all the information
SK3 that I could
1= strongly disagree and 10= strongly agree

Table 2- Statements Professional Scepticism

49
3.10.2 Independent Variable

Reliance on CAATs - To measure auditors’ reliance on CAATs, eight questions were

conducted with inspiration from the study made by Janvrin et al. (2009). Five of these
questions refer to a specific audit area meanwhile the remaining three refers to the
different stages in the audit process. The questions are based on a ten-point Likert scale
(1 = Not at all, 10 = Very much). While answering these questions, the participant was
asked to consider the most complex case they have audited during the past year. Questions
concerning CAATs are the following:

While working on that case, how much did you rely on CAATs when testing samples?
CA1
CAATs in a specific Area

1= Not at all and 10= Very much

While working on that case, how much did you rely on CAATs in the evaluation of inventory
CA2 existence and completeness?
1= Not at all and 10= Very much
(CA)

While working on that case, how much did you rely on CAATs when identifying journal
CA3 entries and other adjustments to be tested?
1= Not at all and 10= Very much
While working on that case, how much did you rely on CAATs in the aspect of internal controls?
CA4
1= Not at all and 10= Very much
While working on that case, how much did you rely on CAATs when evaluating fraud risk?
CA5
1= Not at all and 10= Very much

CP1 While working on that case, how much did you rely on CAATs in the planning stage?
CAATs in the
audit Process

1= Not at all and 10= Very much

CP2 While working on that case, how much did you rely on CAATs in the execution stage?
(CP)

1= Not at all and 10= Very much

CP3 While working on that case, how much did you rely on CAATs in the reporting stage?
1= Not at all and 10= Very much

Table 3- Questions CAATs

3.10.3 Moderating Variable

Trait scepticism - nine items derived from Robinson et al. (2018) modification of the
Hurtt’s scale (2010) was used to measure trait scepticism. The statements are measured
through using a ten-point Likert scale (1= Strongly disagree, 10=Strongly agree). The
higher the value, the more sceptical the respondent is in its nature. In this questionnaire,
the statements measuring the three characteristics representing trait scepticism (Self-
Determining, Interpersonal Understanding and Self-Confidence) were reduced from 16
statements to 9 statements. Reducing the statements in the questionnaire can potentially
increase the responses. When ranking these statements, the auditor was asked to think of

50
themselves in general. The modified and final scale on trait scepticism contains the
following statements:

I like to understand the reason for other people’s behavior

IU1
Understanding
Interpersonal

1= strongly disagree and 10= strongly agree

The actions people take and the reasons for those actions are fascinating
(IU)

IU2
1= strongly disagree and 10= strongly agree
I seldom consider why people behave in a certain way
IU3
1= strongly disagree and 10= strongly agree

I usually question things I see, read, or hear at face value

Self-Determining

SD1
1= strongly disagree and 10= strongly agree
It is not easy for other people to convince me
(SD)

SD2
1= strongly disagree and 10= strongly agree
I usually notice inconsistencies in explanations
SD3
1= strongly disagree and 10= strongly agree

I have confidence in myself

Self-Confidence

SC1
1= strongly disagree and 10= strongly agree
I am self-assured
(SC)

SC2
1= strongly disagree and 10= strongly agree
I am confident of my abilities
SC3
1= strongly disagree and 10= strongly agree
Table 4- Statements Trait Scepticism

3.10.4 Control Variables

Company
Company was chosen as a control variable because the work environment differs between
different audit firms. Auditors' professional scepticism is affected by the work
environment (Sayed Hussin et al., 2017), where the environment affects the applied
professional scepticism on risk assessments (Quadackers et al., 2014). Thus, the level of
professional scepticism will most likely differ between firms. The variable Company was
measured as a dummy variable with information collected from the respondents’ email-
address.

Gender
Gender was chosen as a control variable because it was found in previous research that
some differences exist between females and males. Females are more conservative, are
able to find more inaccuracies and are less risk-averse compared to males (Breesch &

51
Branson, 2009; Niskanen, Karjalainen, Niskanen & Karjalainen, 2011). This can indicate
that women exhibit a higher level of professional scepticism. Gender was measured as a
dummy variable where 1 equals female and 0 equals male.

Age
Concerning the dependent variable, professional scepticism, which is a representation of
judgment (Nelson, 2009), prior research shows that older individuals are less likely to
make more extreme judgments and decisions in uncertain situations compared to younger
individuals (Wallach & Kogan, 2007). Despite the fact that younger individuals are more
likely to make more extreme judgments, they can still be equally certain, like older
individuals, of their judgments (Wallach & Kogan, 2007). Borders, Rohrer, Xu and Smith
(2004) discuss the effect of age on scepticism in various situations in health care where it
is shown that an individual's age is related to its professional scepticism. Age of the
respondents was measured through subtracting the stated year of birth from 2020, which
is the year that the survey was conducted.

Organizational tenure
Years within the organization is one of the control variables in this research since the
working procedure within one organization can differ from another (Hurtt et al., 2013).
According to Nelson (2009), audit firms can affect professional scepticism through
training, performance appraisal, motivation, decision aids, and changes in tasks and
institutions. Levels of training and motivation within organizations might differ between
audit firms which can lead to different levels of professional scepticism (Hurtt et al.,
2013). Bazerman, Loewenstein and Moore (2002) argue that auditors can be trained in
order to be sceptical. This means that audit firms who educate their auditors to perform
more sceptical behaviour will most likely increase their professional scepticism.
Therefore, it is most likely that years within the organization will affect auditors’
professional scepticism. Organizational tenure is measured by asking the respondents
how many years they have worked within the current organization.

Professional tenure
The amount of years within the audit profession is used as a control variable in this study
since it might affect auditors professional scepticism. An auditor with longer experience

52
within the profession is more likely to apply more professional scepticism rather than a
junior, who just started to work (Enofe, Ukpebor & Ogbomo, 2015). According to Gunasti
(2010), experience improves auditors’ capabilities to judge professionally since
experienced auditors have comprehensive knowledge regarding the audit profession. An
experienced auditor holds a long period of training in identifying fraud, assessing fraud
risk, and creating audit procedures that can identify fraud. This is made through having a
sceptical mind and applying professional scepticism to the audit (Carpenter & Reimers,
2013). Auditors who possess longer work experience are able to provide broader views
of hypotheses to explain the audit findings (Shaub & Lawrence, 1996). Further, Shaub
and Lawrence (1996) argue that auditors with more experience are more likely to
demonstrate a higher level of professional scepticism. Professional tenure is measured by
asking the respondent how many years they have worked within the audit profession.

Partner
A question regarding whether the participant is a partner or not is asked since a partner’s
instructions affect the way the audit is conducted (Carpenter & Reimers, 2013). Which in
the end will influence the level of professional scepticism applied by the auditor (Nelson,
2009). A partner's emphasis on professional scepticism will affect both the efficiency and
effectiveness of identification of relevant fraud risk factors in the audit procedure
(Carpenter & Reimers, 2013). Thus, it is likely that partners exhibit higher levels of
professional scepticism. To measure whether the participant is a partner or not a question
was asked where they could answer yes or no.

3.11 Data Analysis

In order to analyze the quantitative data collected through the website Qualtrics, it has
been brought into Excel, where the data was coded into various categories. The coded file
was further transferred into the statistical program SPSS. Within SPSS, the data was put
into various categories and several tests were performed. Firstly, a Cronbach’s alpha test
was conducted to test the level of reliability of the different variables. Further, a
descriptive statistics test was performed on all variables, the dependent variable, the
independent variable, the moderating variable, and lastly the control variables. This was
done in order to get a clearer picture of the data sample and receive information regarding

53
the minimum value, the maximum value, the mean value and the standard deviation value.
All variables passed the Cronbach’s alpha test which means that a mean value of the
variables could be established. Continuously, a principal component analysis was
conducted to investigate the correlation between the various questions and statements
representing the variables. This was done to see how the respondents comprehend the
different questions and whether these further can be divided into different factors. The
fact that the sample consists of more than 100 responses, indicates a normal distribution
(Saunders et al., 2016), nevertheless, a Kolmogorov-Smirnov test is performed to
investigate whether the sample is normally distributed or not. The Kolmogorov-Smirnov
test showed that the variables were significant and therefore, indicated a non-normal
distribution of the sample. The non-normal distribution allows the implementation of the
Spearman correlation matrix to investigate whether correlations between the variables
can be found. Thereafter, a multiple linear regression analysis is performed in order to
identify whether there is a significant relationship between professional scepticism and
CAATs, in combination with several control variables. This was made to investigate
whether hypothesis 1 is supported or not. Finally, a hierarchical moderated multiple linear
regression analysis is established to investigate potential support for hypothesis 2, and
thereby identify whether there exists a moderating effect of trait scepticism on the
relationship between professional scepticism and CAATs.

3.12 Reliability and Validity

In order to evaluate the quality of the research, it is crucial to consider the reliability and
validity of the data (Bryman & Bell, 2015). According to Saunders et al. (2016), reliability
refers to the repeatability of the research. Moreover, it is the fact whether the research
will show consistent results over time and when it is replicated and executed in a different
environment (Bryman & Bell, 2015). In order to evaluate the reliability of the variables
in this study, all variables have been tested with the Cronbach’s alpha test. A Cronbach’s
alpha coefficient varies between 1 and 0, where 0.70 is typically regarded as the
acceptable level of internal reliability (Bryman & Bell, 2015).

Validity refers to the degree to which a measurement is representing a variable it is

supposed to be representing (Bryman & Bell, 2015). Statements that were used in the

54
questionnaire to measure specific variables are retrieved from existing literature and
established measurements. Moreover, all proposed hypotheses are based on existing
literature which further strengthens the validity of this study. According to Bryman and
Bell (2015), construct validity covers studies where hypotheses are based on existing
literature, therefore, the focus of this study will be constructed validity.

Statements concerning professional scepticism and trait scepticism are adopted from the
questionnaire by Robinson et al. (2018) that was originally developed by Hurtt (2010).
According to Google Scholar, the article by Hurtt (2010) is cited 378 times. The article
by Robinson et al. (2018) is cited 13 times, which is significantly lower, however, this
article is more recent and contains statements that are a modification of the original
questionnaire by Hurtt (2010) which is cited more often. Next, statements concerning
CAATs were developed based on the study by Janvrin et al. (2009). According to Google
Scholar, this article is cited 114 times, which is lower than the dependent and moderating
variable, however, statements in the article by Janvrin et al. (2009) are based on prior
literature that has been cited very frequently (Venkatesh, Morris, Davis & Davis, 2003:
4945 times cited; Compeau & Higgins, 1995: 1659 times cited).

The response rate of the data was 18.6% (522/2800). This low response rate can be rather
problematic since there is a greater risk for biases. Nevertheless, Saunders et al. (2016)
argue that the response rate on internet-mediated questionnaires is typically very low.
Furthermore, the questionnaire was sent out to the auditors during their busiest period of
the year, therefore, a high response rate was not expected. Lower response rates also
indicate more time for analysis of the results.

3.13 Ethical Consideration

Collection and use of quantitative data encompass certain responsibilities. The

questionnaire used in this thesis contains sensitive information about the respondents, for
example, their email address, name, and age. According to Saunders et al. (2016),
confidentiality and anonymity are the most important factors to consider in the handling
of personal information. Failure of meeting this confidentiality and anonymity of
respondents might cause harm to respondents. To act in accordance with these

55
responsibilities, the respondents have been informed, through the cover letter, that
participation in this survey is voluntary and anonymous. The respondents have therefore
approved and are aware of the fact that their information, along with their answers will
only be used with the purpose of performing this research. Moreover, all information will
be managed in accordance with GDPR. This confidential and anonymous approach
ensures that there will be no harm caused by the participants.

56
 4. Results and Analysis

___________________________________________________________________________________

This chapter demonstrates the findings of the data which has been gathered through a
statistical analysis of the survey data.
______________________________________________________________________

4.1 Descriptive Statistics

Descriptive statistics are implemented to provide a definitive overview of the empirical

data. The dependent, independent, moderating and control variables are presented in their
own individual tables which provides a clear presentation of each variable.

4.1.1 Dependent Variable

Professional scepticism is the dependent variable which was measured through ten
statements. The dependent variable passed the reliability test with a Cronbach's alpha of
0.895, thus the statements were combined into the same variable and a mean value can be
established.

Descriptive Statistics N Minimum Maximum Mean [Link]

Professional
Scepticism 426 4.70 10 8.42 1.12
Table 5- Descriptive Statistics Professional Scepticism

Table 5 displays to which extent the respondents perceive themselves to exercise

professional scepticism in a specific situation. The mean value of 8.42, calculated as the
average of the ten statements, indicates that the respondents view themselves as
professionally sceptical since it is above the middle point on a ten-point Likert scale.

4.1.2 Independent Variable

CAATs is the independent variable and was measured through the five statements
referring to a specific audit area in the questionnaire. The remaining three statements

57
representing different stages of the audit process were not significant in the hypothesis
testing and are therefore excluded from further tests. The five statements that were found
significantly passed the reliability test with a Cronbach’s alpha of 0.906, there, the
statements were merged together into the same variable where a mean value can be
established and used.

Descriptive Statistics N Minimum Maximum Mean [Link]

CAATs 410 1.00 10 4.87 2.54
Table 6- Descriptive Statistics CAATs

Table 6 shows to which extent the respondents rely on the CAATs in their work. The
mean value of 4.87 indicates that the respondents' reliance on CAATs is average, as it is
slightly below the middle on a ten-point Likert scale.

4.1.3 Moderating Variable

Trait scepticism is the moderating variable and was measured through nine statements in
the questionnaire. The moderating variable passed the reliability test with a Cronbach’s
alpha of 0.773, therefore, the statements were combined together, and a mean value was
established.

Descriptive Statistics N Minimum Maximum Mean [Link]

Trait
Scepticism 426 4.78 10 7.71 0.92
Table 7- Descriptive Statistics Trait Scepticism

Table 7 shows to which extent the respondents perceive themselves to exercise trait
scepticism in their work, meaning to which extent they perceive themselves to have stable
and personal characteristics that make them individually sceptical. The mean value of
7.71 indicates that the respondents perceive their individual scepticism, trait scepticism,
to be relatively high since it is above the middle point on a ten-point Likert-scale,
however, somewhat below the highest point on the scale.

58
4.1.4 Control Variables

Several control variables have been implemented in the analysis. In this section, the
control variables are presented to provide a clear overview of the characteristics of the
sample.

Gender, Age
Gender is measured through a dummy variable, where 1 = female and 0 = male. Table 8
indicates that 35 % (35.4) of the sample are females. Regarding age, the data shows that
the youngest participant is 28 years old and the oldest is 82 years old. The average age of
all respondents is 48 (47.68) years old.

Descriptive Statistics N Minimum Maximum Mean [Link]

Gender 435 0.00 1.00 0.354 0.48
Age 435 28 82 47.68 11.76
Table 8- Descriptive Statistics Gender, Age

Organizational Tenure, Professional Tenure, Partner

Organizational tenure describes how many years the respondent has worked within the
organization. Table 9 shows that the average organizational tenure is 14 years and 6
months. Professional tenure describes how many years the respondent has been working
within the audit profession. Table 9 indicates that the average professional tenure is 21
years and 2 months. Moreover, of all the respondents 59% are partners in their audit
firms.

Descriptive Statistics N Minimum Maximum Mean [Link]

Organizational Tenure 425 0.00 46.00 14.47 9.83
Professional Tenure 425 5.00 55.00 21.18 11.48
Partner 424 0.00 1.00 0.59 0.49
Table 9- Descriptive Statistics Organizational Tenure, Professional Tenure, Partner

Company
The company refers to the organization that the respondents work at. Table 10 shows that
the majority of respondents, 54%, belong to Others, meaning that they work at an audit
firm that is smaller than the Big 7. Moreover, 46 % of the respondents work at the Big 7

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audit firms and approximately 32% work at the Big 4. Further, responses from auditors
at the Big 7 firms are displayed individually in the second section of the table.

Descriptive Statistics N Minimum Maximum Mean [Link]

Big 4 435 0.00 1.00 0.3195 0.467
Big 7 435 0.00 1.00 0.4598 0.499
Others 435 0.00 1.00 0.5402 0.499
PWC 435 0.00 1.00 0.1609 0.368
EY 435 0.00 1.00 0.1172 0.322
Deloitte 435 0.00 1.00 0.0299 0.171
KPMG 435 0.00 1.00 0.0115 0.107
Mazars 435 0.00 1.00 0.0161 0.126
BDO 435 0.00 1.00 0.0529 0.224
GT 435 0.00 1.00 0.0713 0.258
Table 10- Descriptive Statistics Company

4.2 Principal Component Analysis

A principal component analysis, hereafter mentioned as factor analysis, is performed to

test whether the variables can be summarized through using a smaller set of factors. The
factor analysis is performed to investigate the interrelationship between the variables
presented in this study. Moreover, it is a technique used to explain different correlations
among multiple outcomes as a result of one or more underlying explanations. When
performing factor analysis, reduction of data is made in the attempt of representing a set
of variables by a smaller number (Pallant, 2013).

To perform a factor analysis, two main criteria must be attained. The first criterion is the
size of the sample, where the recommendation is to have a minimum of 300 cases. This
recommendation is especially concerning the reliability of the test. In this study, the
sample consists of 435 usable answers, meaning that the first criterion is attained. The
second criterion refers to the strength of the interrelations between the variables. This is
tested through Barlett’s test of sphericity and the Kaiser-Meyer-Olkin (KMO) test. The
Barlett’s test must be significant (P<0.05) in order for the factor analysis to be
appropriate. The KMO test ranges from 0 to 1 where a recommendation of 0.6 as a
minimum is needed to perform a factor analysis (Pallant, 2013).

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4.2.1 Dependent Variable

When performing a factor analysis on professional scepticism it was found that the
Barlett’s test equals p<0.000 and that the KMO index value equals 0.873. Thus, the factor
analysis can be performed. The factor analysis, in the Rotated Component Matrix in Table
11, indicated two different correlations within the dependent variable. Component 1
explains more of the variance than component 2 since more of the questions are
interrelated within component 1. Table 11 shows that questions 4-10 are perceived by the
participants in one way meanwhile questions 1-3 are perceived differently. Nevertheless,
it can be seen that question four, referring to the Suspension of Judgment, appears in both
components. The perception of the respondents divided into the different components is
somewhat consistent with the characteristics presented in the dependent variable.
Questions 1-3 are presented by the characteristic “Questioning Mind” (QM) meanwhile
questions 4-10 are presented by the characteristics “Suspension of Judgment” (SJ) and
“Search for Knowledge” (SK). This indicates that Suspension of Judgment and Search
for Knowledge is perceived in the same way by the participants meanwhile Questioning
Mind is comprehended differently.

Component 1 Component 2
SJ4 0.778
SK1 0.764
SJ3 0.751
SK2 0.736
SJ2 0.730
SK3 0.659
SJ1 0.658 0.436
QM2 0.929
QM1 0.923
QM3 0.543
Table 11- Rotated Component Matrix Professional Scepticism

4.2.2 Independent Variable

The KMO value for the independent variable CAATs equals 0.839, with a significance
of p<0.000 on the Barlett’s test, which allows for the performance of a factor analysis.
The factor analysis showed that all five questions regarding reliance on CAATs are
perceived similarly by the participants, moreover, it means that the respondents perceived

61
the questions to belong to one single factor. Accordingly, only one component was
indicated, proving no further need for a Rotated Component Matrix.

4.2.3 Moderating Variable

The moderating variable, trait scepticism, provided a significant Barlett’s test with
p<0.000 and a KMO value of 0.771. A KMO value above 0.6 indicates that factor analysis
can be performed with good reliability. Table 12, the Rotated Component Matrix for trait
scepticism shows that the respondents perceive the questions according to three different
categories, thus three different components are displayed. The three components are
perceived according to the characteristics used to depict the variable. Questions 1-3,
represented by the characteristic “Interpersonal Understanding” (IU), are perceived to
belong to one component. Further, questions 4-6 represented by “Self-Determining” (SD)
are viewed differently and lastly, questions 7-9, represented by the characteristic “Self-
Confidence” (SC) are perceived to adhere to a third variable by the participants. To
summarize, all three characteristics representing the moderating variable, trait scepticism,
are perceived differently by the participants, the division of the moderating variable into
the three components is clearly visible in the Rotated Component Matrix in Table 12.

Component 1 Component 2 Component 3

IU2 0.907
IU3 0.896
IU1 0.874
SC2 0.880
SC1 0.867
SC3 0.851
SD1 0.782
SD3 0.758
SD2 0.700
Table 12- Rotated Component Matrix Trait Scepticism

4.2.4 Dependent-, Independent-, and Moderating Variable

To investigate whether some of the variables are perceived similarly by the respondents,
factor analysis is performed on all three variables simultaneously. The composited
variables provided a significant Barlett’s test (p<0.000) and a KMO index value of 0.833,

62
which allows the performance of factor analysis on all composed variables. The factor
analysis shows, in table 13, a result that all variables are perceived and comprehended in
different ways with a distribution equal to the individual distribution for each and single
variable. The dependent variable is distributed according to two components, the
independent variable into one component and the moderating variable is viewed as three
different components. Nevertheless, an interesting observation is a fact that the dependent
variable, professional scepticism, and the moderating variable, trait scepticism, are
divided into different components. This means that these two variables are perceived
differently, meaning that professional scepticism and trait scepticism could be argued to
be two separate measurements.

Component 1 Component 2 Component 3 Component 4 Component 5 Component 6

SJ4 0.789
SK1 0.776
SJ3 0.753
SK2 0.745
SJ2 0.731
SJ1 0.704
SK3 0.679
QM3 0.477 0.401
CA1 0.893
CA3 0.874
CA5 0.861
CA2 0.825
CA4 0.801
IU2 0.897
IU3 0.887
IU1 0.848
SC2 0.856
SC1 0.845
SC3 0.837
QM2 0.855
QM1 0.850
SD1 0.754
SD2 0.733
SD3 0.694

Table 13- Rotated Component Matrix Professional Scepticism, CAATs, Trait Scepticism

In summary, all three variables are viewed differently by the participants of the study,
meaning that they are three separate variables and should not be combined with each
other. Even though the dependent- and moderating variables are perceived as two and
three components respectively, the variables are still applied as a whole in the study. This
is particularly because the statements used in the study are conducted from already

63
existing and established models where the variables are viewed as one component and
not as several components.

4.3 Normal Distribution

According to Saunders et al. (2016), a normal distribution can be assumed on samples

containing more than 100 cases, a normal distribution could, therefore, be assumed.
However, a Kolmogorov- Smirnov test is performed to find out the distribution of the
sample. Data from the dependent variable, professional scepticism, shows a significance
level of p<0.000, which Pallant (2013) argues to indicate a non-normal distribution of the
data. The distribution of the professional scepticism is displayed in Figure 2, where a non-
normal distribution is shown. The non-normal distribution realizes the use of Spearman
correlation matrix, which is done in order to investigate whether a potential correlation
between the variables can be identified.

Distribution of Professional Scepticism

45

40

35
30
Frequency

25

20
15

10
5
0
0 5 6 7 8 9 10

Mean Value of Professional Scepticism

Figure 2- Distribution of Professional Scepticism

4.4 Spearman Correlation Matrix

As a result of the non-normal distribution, a Spearman’s rank correlation coefficient test

must be performed. The Spearman correlation test investigates whether there is a
significant positive or negative relationship between two variables (Pallant, 2013), where

64
1 equals a perfect positive correlation and -1 equal a perfect negative correlation
(Saunders et al., 2016). The significant levels are: **p < 0.01 = strong significance; *p <
0.05 = moderate significance; †p < 0.1 = weak significance.

The Spearman correlation matrix displays a variety of significant correlations. However,

before investigating possible correlations between the variables, considerations have been
made regarding multicollinearity. However, tests for multicollinearity will be done in the
next sections, 4.5 “Multiple Linear Regression Analysis” and 4.6 “Hierarchical
Moderated Multiple Regression Analysis”. Firstly, the matrix indicates that there is a
moderate positive significant correlation between the dependent variable, professional
scepticism, and the independent variable, CAATs (0.103*). This can be interpreted as that
the more a respondent relies on CAATs, the more professional scepticism is also
executed. Secondly, the moderating variable, trait scepticism, displays a strong significant
correlation with the dependent variable, professional scepticism (0.425**). This
correlation indicates that an increase in trait scepticism also leads to an increase in the
professional scepticism of the participant. Similarly, trait scepticism also shows a strong
positive correlation with the independent variable, CAATs (0.150**). This means that if
the respondent has high levels of trait scepticism, their reliance on CAATs is higher.

The control variable Gender shows a strong significant correlation with the dependent
variable, professional scepticism, (0.126**) which means that females apply higher levels
of professional scepticism than males. Professional tenure shows a weak positive
significant correlation with professional scepticism (0.091†). This means that as when
years within the audit profession increase, the auditors’ professional scepticism is
increasing likewise. Moreover, Age shows a moderate significant correlation with
professional scepticism (0.126*), which indicates that professional scepticism increases
with age, meaning that the older the auditor is, the more professional scepticism is also
executed. Lastly, a significant correlation of 0.081† is found between the control variable
Partner and the dependent variable professional scepticism. This emphasizes that
auditors that are partners execute higher levels of professional scepticism.

The control variable Professional tenure shows a positive significant correlation with the
independent variable, CAATs (0.173**). This means that reliance on CAATs increases

65
with years worked within the audit profession. Looking at Table 14, auditors working at
the Big 7, show a strong positive significant correlation with reliance on CAATs,
meanwhile, auditors working for a company other than the Big 7 (Others) show a strong
negative significant correlation with reliance on CAATs (0.343** respectively -0.343**).
This means that auditors outside the Big 7 rely less on the output from CAATs. Moreover,
PwC and EY are companies within the Big 7 that rely the most on CAATs. Lastly, Partner
shows a strong negative significant correlation with reliance on CAATs (-0.153**),
which indicates that auditors that are partners, rely less on CAATs compared to other
auditors.

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Variables 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1. Professional Scepticism
2. CAATs .103*
3. Trait Skepticism .425** .150**
4. Gender .126** .017 .009
5. Age .104* -.009 .117* -.217**
6. Organizational Tenure .069 .173** .126** -.142** .562**
7. Professional Tenure .091† -.004 .110* -.211** .948** .601**
8. Partner .081† -.153** .061 -.191** .472** .283** .492**
9. Big 4 -.068 .308** .028 .080† -.246** .170** -.190** -.471**
[Link] 7 -.053 .343** .024 0.147** -.301** .083† -.256** -.488** .743**
11. Other .053 -.343** -.024 -.147** .301** -.083† .256** .488** -.743** -1**
12. PWC -.020 .117* .034 .055 -.141** .142** -.101* -.298** .639** .475** -.475*
13. EY -.027 .271** .016 .029 -.106* .091† -.081† -.243** .532** .395** -.395** -.160**
14. Deloitte -.076 .090† -.007 .039 -.111* .022 -.090† -.101* .256** .190** -.190** -.077 -.064
15. KMPG -.028 -.005 -.032 .010 -.091† -.056 -.093† -.130** .157** .117** -.117** -.047 -.039 -.019
16. Mazars -.007 -.075 -.091 .020 -.028 .036 -.016 -.004 -.088† .139** -.139** -.056 -.047 -.022 -.014
17. BDO .017 .035 -.005 .018 -.016 -.102* -.043 -.053 -.162** .256** -.256** -.103* -.086 -.041 -.025 -.030
[Link] .010 .105* -.046 .113* -.106* -.076 -.103* -.041 -.190** -.300** -.300** -.121 -.101* -.049 -.030 -.035 -.065
Note: ** p < 0.01; * p < 0.05; † p < 0.1

Table 14- Spearman Correlation Matrix

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4.5 Multiple Linear Regression Analysis

The first hypothesis is tested through multiple linear regression analysis. This analysis is
implemented to investigate whether there is a relationship between the dependent variable
and one or more independent variables or predictors. Multiple linear regression is based
on correlations between the variables, however, it can also be used to perform more
sophisticated explorations of the interrelationship. Further, this analysis explores to which
extent a set of variables can predict a certain outcome and specifies information regarding
the model as a whole but also regarding the contribution from the variables (Pallant,
2013). To perform a multiple linear regression analysis, Pallant (2013) recommends a
minimum sample size of 40 cases for every independent variable. In a multiple linear
regression analysis, it is crucial to control the values for multicollinearity.
Multicollinearity appears when there is a high correlation between the independent
variables and should be avoided in a regression analysis. Multicollinearity can be
measured through the VIF-value. This measure indicates the correlation between the
independent variables, where a value below 10 is preferable in a good regression analysis
(Pallant, 2013).

To test hypothesis 1 (H1): “Increasing reliance on CAATs will have a negative

relationship with professional scepticism in the audit process”, the multiple linear
regression analysis is conducted and demonstrated in Table 15. Table 15 presents the
multiple linear regression analysis with the control variables Gender, Partner,
Organizational tenure, Age and Big 7 which provided a significant F-value equal to
4.161** in the ANOVA table. This shows that the whole model is statistically significant
with N=404. The highest VIF-value provided in the model equaled 1.962. Since this is
below the cut-off of 10 (Pallant, 2013), no indication of multicollinearity is assumed in
this test. Regarding the R Square value, the model shows a value of 0.059, which explains
that 5.9% of the variance in the dependent variable, professional scepticism, is explained
through the independent variable, CAATs (Pallant, 2013). Hypothesis 1 in table 15 shows
a positive significant relationship (0.135**) between the independent variable, reliance
on CAATs, and the dependent variable, professional scepticism. This means that
hypothesis 1 is rejected since a negative relationship was expected between the variables.
Moreover, the test also displayed a strong positive significant relationship between the

68
control variable Gender and professional scepticism (0.174**), which indicates that
females, rather than males, apply higher levels of professional scepticism.

Hypothesis 2
Hypothesis 1
Variables Professional
Professional Scepticism
Scepticism
Std. B [Link] Std. B [Link]
Step 1 Constantª 7.518** .307 3.849** .480
Gender .174** .118 .166** .107
Partner .087 .139 .070 .126
Organizational Tenure .001 .007 -.029 .007
Age .086 .007 .056 .006
Big 7 -.067 .140 -.060 .127
Step 2 CAATs .135** .023 .093* .022
Trait Scepticism 0.424** .055
Step 3 CAATs x Trait Scepticism
.089* 0.50
Overall R² (Overall Adj R²) .059 (.045) .239 (.224)
Overall F for R² 4.161** 15.509**
VIF- value, highest 1.962 1.967
Note:
a. Un-standardized coefficient
** p < 0.01; * p < 0.05; †p < 0.1

Table 15- Hypothesis 1, Hypothesis 2

Before determining the best significance level for hypothesis 1 (H1), several tests were
performed. The multiple regression analysis was performed on several different control
variables and the outcome from the principal component analysis. The principal
component analysis displayed that the dependent variable was perceived as two
components by the participants. Component 2 (question 1-3) from the dependent variable,
showed an ANOVA significance of p = 0.366 which indicates that the test cannot be
performed since p>0,10. However, through testing component 1, represented by
questions 4-10, ANOVA displayed a significant level of p = 0.004, which indicates that
a test can be performed and used. Despite the fact that the regression analysis shows that
component 2 is not significant, both components are conducted from an established and
priorly used model. Moreover, component 1 shows good significant value. Thus,
representation of the dependent variable, professional scepticism, consists of both
components that together make the hypothesis 1 (H1).

Moreover, tests with different combinations of the control variables were performed in
order to find the best significance value for hypothesis 1. All possible combinations and
their significance level are presented in Table 16 below. The control variables Gender,

69
Partner and Organizational tenure were consistent during all tests since there is no
multicollinearity between the variables. The control variables Age and Professional
tenure were tested separately since multicollinearity was found between the variables.
The same refers to the variable Company, where different tests were performed on all
companies individually, Big 4, Big 7 and Others. Lastly, the outcome from the different
tests was performed where Age and Big 7, together with the rest of the control variables
(Gender, Partner and Organizational tenure), provided the best significance level for
hypothesis 1 (H1).

ANOVA Significance of R square VIF-

Control Variables sig independent value value

Age and All companies .008 .135* .065 2.833

Professional tenure and All companies .010 .137* .064 2.745
Age and Big 4 .001 .129* .058 1.960
Professional tenure and Big 4 .001 .130* .056 2.009
Age and Big 7 .000 .135** .059 1.962
Professional tenure and Big 7 .001 .130* .056 2.009
Age and Others .001 .135* .059 1.962
Professional tenure and Others .001 .137* .057 2.028

Table 16- Tests of hypothesis 1

4.6 Hierarchical Moderated Multiple Regression Analysis

To test hypothesis 2 (H2): “Individual trait scepticism will positively moderate the
negative relationship between CAATs and professional scepticism”, a hierarchical
moderated multiple regression analysis has been conducted.

According to Pallant (2013), all independent variables should be included according to a

theoretical ground. Accordingly, all independent variables, including the control
variables, in this study are implemented in the regression analysis based on a theoretical
ground. The variables are implemented in different steps, depending on what each of the
variables adds to the prediction of the dependent variable, professional scepticism. The
hierarchical moderated multiple regression analysis has been conducted through three
main steps. Firstly, the control variables are entered into the model. Secondly, the

70
independent variable, CAATs, and the moderating variable, trait scepticism, are
implemented into the model. In the last step, the interaction of the independent variable
and moderating variable, CAATs X trait scepticism, is implemented. Implementation of
these variables is done in order to investigate whether trait scepticism moderates the
relationship between professional scepticism and CAATs.

Various control variables were implemented into the regression analysis to test which
combination that provided the best significance. Nevertheless, the hierarchical moderated
multiple regression analysis was performed based on the same combination of control
variables as in H1, to get a consistency of the tests and reliability in the measurements.
Moreover, combinations of the different variables provided more even and similar results
than in H1, which is seen in table 17. The chosen variables in H1, Age and Big 7 showed,
together with the test on the variables Professional tenure and all companies individually,
the best significant levels. These tests showed an ANOVA significance of p<0.001, and
a strong positive significant correlation of trait scepticism on professional scepticism.
Further, these tests also showed a positive significant correlation between CAATs and
professional scepticism. However, Age and Big 7 provide the best VIF-value which
indicates the lowest risks for multicollinearity. Due to this, and in respect to the chosen
control variables in H1, Age and Big 7 are chosen as control variables for H2, together
with Gender, Partner and Organizational tenure.

Significance of
ANOVA independent X Significance of Significance of R square VIF-
Control Variables sig moderator independent moderator value value
Age and All companies .000 .091* .078† .424** .245 2.846

Professional tenure and All companies .000 .092* .079* .425** .245 2.760
Age and Big 4 .000 .088† .071† .425** .238 1.972
Professional tenure and Big 4 .000 .089† .072† .426** .237 2.024
Age and Big 7 .000 .089* .093* .424** .239 1.967
Professional tenure and Big 7 .000 .089* .087* .426** .237 2.024
Age and Others .000 .089* .057 .424** .239 1.992
Professional tenure and Others .000 .090* .058 .425** .238 2.045

Table 17- Tests of hypothesis 2

Looking at the hierarchical moderated multiple regression analysis in Table 15, the
control variables used to test H2 are Gender, Partner, Organization tenure, Age and Big
7. These variables provided the best significance level in the analysis. Hypothesis 2 in

71
Table 15 shows a significant result with N = 404 since the F-value is equal to 15.509**.
The highest VIF-value presented in the analysis equals 1.977, which is below the cut-off
value of 10 (Pallant, 2013), and thus, no indication of multicollinearity is assumed. The
value of R square equals 23.9%, which explains the amount of variance in professional
scepticism expressed in the model. By looking at table 15, CAATs shows a positive
significant correlation with professional scepticism (0.093*). Further, trait scepticism
shows a strong positive correlation with professional scepticism (0.424**). Lastly, trait
scepticism shows a significant positive moderating effect on the relationship between
CAATs and professional scepticism (0.089*). This indicates that H2 is supported. Since
H2 is supported there is a positive moderating effect of trait scepticism on the relationship
between CAATs and professional scepticism. However, since H2 is based on the rejected
H1, arguing for a negative relationship between CAATs and professional scepticism, the
moderating effect is only valid for the positive relationship between the variables. Hence,
despite the rejection of the negative relationship between CAATs and professional
scepticism, H2 is supported since it highlights the positive moderating effect of trait
scepticism. In order to interpret the moderating effect, the model has been plotted through
inserting the results into an Excel worksheet established by Aiken and West (1991),
Dawson (2014) and Dawson and Richter (2006).

Figure 3 shows that when an auditor possesses high levels of individual traits, CAATs
have a positive effect on professional scepticism. Lower levels of trait scepticism also
show a positive effect on the relationship between CAATs and professional scepticism,
nevertheless, somewhat moderate compared to the effect of the high levels of trait
scepticism. Thus, trait scepticism has a positive moderating effect on the relationship
between CAATs and professional scepticism, where higher levels of trait scepticism lead
to a higher effect of CAATs on professional scepticism.

72
 10

7
Professional Scepticism

6 Low Trait
Scepticism
5
High Trait
Scepticism
4

1
Low CAATs High CAATs

Figure 3- Standardized Two-Way Interaction Effect Trait Scepticism

4.7 Hypotheses

• H1: Increasing reliance on CAATs will have a negative relationship with

professional scepticism in the audit process.
• H2: Individual trait scepticism will positively moderate the negative relationship
between CAATs and professional scepticism.

In order to investigate whether the hypotheses in this study are supported or not, the
multiple linear regression analysis and hierarchical moderated multiple regression
analysis have been used. In table 18, the results for both H1 and H2 are displayed. The
result for H1 in table 15 shows a positive significant relationship between CAATs and
professional scepticism. Thus, H1 is not supported in this thesis. Moreover, H2 in table
15 displays that trait scepticism has a significant positive moderating effect on the
relationship between CAATs and professional scepticism. Therefore, table 18 shows
support for H2.

H1 H2
Supported *
Not supported *
Table 18- Hypotheses Overview

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 5. Discussion

___________________________________________________________________________________

This chapter presents the discussion of the findings which are presented in the previous
chapter. Moreover, this chapter will discuss the findings in relation to the two hypotheses.
______________________________________________________________________

The purpose of this thesis is to explain the relationship between CAATs and professional
scepticism and investigate whether this relationship is affected by trait scepticism.
Presented results in the previous chapter will be discussed in the context of the
relationship between CAATs and professional scepticism and the results of trait
scepticism as a moderating variable.

5.1 Hypothesis 1

The relationship between structure and judgment becomes more relevant than before as
the structure increases (Agevall et al., 2018). According to Broberg (2013), the structure
has a negative effect on professional judgment where structure makes auditors
mechanical in their way of thinking, which reduces their professional judgment.
Moreover, structure within the audit process is argued to endanger professional judgment
since it influences auditors in when to make judgments and also what type of judgments
that should be executed (Kosmala MacLullich, 2001; Öhman et al., 2006). Auditors are
therefore argued to jeopardize professional judgment through implementing structure
(Smith et al., 2001). However, other studies argue that structure increases professional
judgment rather than reduces it. Stringer (1981) argues that structure guides the auditor’s
professional judgment in the right direction and provides guidance for decision making.
The structure further liberates the auditor from several time-insufficient activities where
more focus can instead be directed towards more complicated tasks (Bierstaker et al.,
2001). Nevertheless, since the majority of the literature provides evidence for a negative
relationship between structure and judgment (e.g. Cushing & Loebbecke, 1986; Kinney,
1986; Knechel, 2013; Kosmala MacLullich, 2001; Myers, 1997; Power, 2003; Schroeder

74
et al., 1996; Smith et al., 2001) this study investigates whether structure is negatively
related to professional judgment.

The relationship between structure and judgment is investigated through a representation

of each concept. A representation provides a new perspective of the relationship,
however, it also contributes with a deeper understanding of the concepts. Structure is
represented by CAATs in this study, this is since CAATs are the digital tools used within
the audit profession (Pedrosa et al., 2019) and are encouraged by auditing standards (ISA
330). Moreover, CAATs are used as a representation for structure since it is a routinized
and structured way of analyzing data where auditors rely on the CAATs as a structural
tool (Braun & Davis, 2003). Meanwhile, judgment is represented by the professional
scepticism of the auditor. Nelson (2009) describes professional scepticism as to the
product of the auditor’s judgment. Both concepts are argued to be crucial in the audit
profession (Hurtt et al., 2013) since they are implemented to achieve a high audit quality
(Hurtt, 2010). Since one of the aims with this thesis is to find whether CAATs have a
negative impact on professional scepticism, it has been argued that implementation of
CAATs makes auditors less reflective of the automatically generated audit evidence
(Gilbert et al., 1990). Moreover, Knechel (2013) argues that an increase in IT-tools like
CAATs limits the execution of professional scepticism. This can result in the fact that
auditors ignore crucial information. CAATs as the representation of structure is further
argued to make auditors mechanical in their way of thinking (Broberg, 2013).

The findings from the analysis show that CAATs have a positive significant relationship
with professional scepticism. It could, therefore, be argued that within the Swedish
context, CAATs provide strategic outcomes that influence professional scepticism
positively. The fact that this study is performed in the Swedish context could have an
impact on the positive relationship. This fits well with the fact that none of the prior
research arguing for the negative impact of CAATs on professional scepticism has been
performed in Sweden. Furthermore, CAATs could benefit the outcome of professional
scepticism through the ability to make the auditor more analyzable, devoting more time
towards assessments of audit risks and operating procedures (Kosmala MacLullich, 2001;
Pedros et al., 2019). Since auditors in this study find themselves to averagely rely on
CAATs, with a mean value of 4.87, they might have to increase their professional

75
scepticism when using CAATs. This fits well with the fact the auditor’s judgment is
necessary in order to decide whether structure generates correct information concerning
the client’s operations (Kosmala MacLullich, 2001). Another way to look at CAATs is
through the benefits generated as a result of the implementation of various IT-systems.
Since CAATs have been argued to increase audit effectiveness and efficiency (Al-Hiyari
et al., 2019), it can be argued that auditors are left with more time for the execution of
professional scepticism. Subsequently, implementation of CAATs has in the recent years
made the audit profession more structured than before (Agevall et al., 2018).
Normalization and increase in technology have placed new expectations on the clients of
the audit firms. To meet these expectations and provide a high-quality audit, auditors
must be properly educated and trained within CAATs. The significant relationship
between CAATs and professional scepticism could therefore additionally be dependent
on that auditors are prepared and trained to sceptically analyze evidence generated from
CAATs.

The result of CAATs could further be discussed from the demographic view of the
respondents, such as years working within an organization that displayed a mean value
of 14.47. This might have an effect on the results since longer experience within one firm
could mean that the auditor has more time to reach comfort within the specific audit
programs of that firm. Meaning that the more time the auditor spends on using the audit
techniques provided by the audit firm, the more experience and knowledge can be
acquired concerning CAATs (Bierstaker et al., 2001; Pedrosa et al., 2019). Furthermore,
the significant relationship between CAATs and professional scepticism could then
depend on the fact that auditors with higher knowledge within CAATs could spend more
time on executing professional scepticism.

5.2 Hypothesis 2

Trait scepticism has been researched as a possible moderating variable on the relationship
between CAATs and professional scepticism for this thesis. This is due to that previous
research (Robinson et al., 2018) has found individual characteristics to be different from
professional scepticism within auditing. Individual characteristics referred to as trait
scepticism (Quadackers et al., 2014), influence state scepticism, professional scepticism

76
(Robinson et al., 2018). Results from the analysis showed that trait scepticism and
professional scepticism are perceived as two separate concepts. In the Swedish context,
this means that auditors perceive their individual characteristics, trait scepticism, to be
separated from the state scepticism, professional scepticism. This result is supported by
a limited section of prior research where Robinson et al. (2018) argues for a separation
between individual characteristics, trait scepticism and state scepticism, professional
scepticism. The difference between trait scepticism and professional scepticism could be
explained through the specific nature of professional scepticism compared to the general
nature of trait scepticism (Robinson et al., 2018). Another explanation could be that
professional scepticism refers to a specific situation within auditing, meanwhile, trait
scepticism is focusing on the individual auditor and its individual characteristics
(Robinson et al., 2018). Thus, this study provides empirical evidence that trait scepticism
and professional scepticism are two different concepts, albeit with matching
characteristics.

Trait scepticism influences professional scepticism because of the impact that the
individual characteristics have on the sceptical behaviour and judgment of the auditor
(Humphrey & Moizer, 1990; Power, 2003). An auditor with higher levels of trait
scepticism is argued to be more critical in its nature which leads to more critical
judgments (Quadackers et al., 2014). The results from the analysis show that trait
scepticism has a positive significant moderating effect on the relationship between
CAATs and professional scepticism. The positive moderating effect could be explained
because of the matching characteristics of trait scepticism and professional scepticism.
These matching characteristics could be emphasized through that Swedish auditors who
apply higher levels of trait scepticism are more analyzable and more likely to investigate
financial information with a more sceptical mind (Nelson, 2009). This means that in
addition to situational factors (Robinson et al., 2018), auditors' behaviour of professional
scepticism is also influenced by their individual trait scepticism. The findings revealed
that Swedish auditors perceived themselves to have a reliance on CAATs at a mean of
4.87, which is a rather low reliance. Due to this, it could be argued that in situations that
require higher reliance on CAATs, auditors with higher levels of trait scepticism are going
to apply more professional scepticism. This could be connected to the finding of Robinson
et al. (2018) who found that the influence of trait scepticism on the professional

77
scepticism of the auditor becomes especially clear in the settings of higher risks and
uncertainty. Therefore, the extent to which professional scepticism of the Swedish
authorized auditors is affected by CAATs is dependent on the individual trait scepticism.

An interesting consideration is that the levels of trait scepticism that the Swedish auditors
perceived themselves to possess, might not be the truth compared to what they really
possess. For the audit profession, if the perceived levels trait scepticism are lower than
the real levels of trait scepticism it might lead to that auditors in the Swedish firms believe
less in their individual characteristics. This, in turn, could be argued to have a lower
impact on the relationship between CAATs and professional scepticism, resulting in
lower levels of professional scepticism.

A final consideration can be connected to the findings by Enofe et al. (2015) and Gunasti
(2010) who found that experience increases the professional scepticism, meaning that the
more experienced the auditor is, the more professional scepticism will be executed in a
specific situation. The experience of the Swedish auditor within the audit field is
identified as a mean value of 21.18 years. This might further be emphasized by the
individual characteristics, which further influence professional scepticism (Hurtt, 2010).
Therefore, the result shown might be an indication that Swedish audit firms are able to
execute higher levels of professional scepticism, not only because of higher levels of trait
scepticism, but also because of their long experience within the audit field.

5.3 Other Empirical Findings

In this study, several different findings were identified in the analysis. Findings from the
analysis showed that auditors’ professional tenure and their age increase their
professional scepticism. This finding is supported by prior research (Carpenter &
Reimers, 2013; Enofe et al., 2015), where it is argued that more experienced auditors are
more likely to apply higher levels of professional scepticism. Experience is improving
auditors’ ability to make professional judgments since they possess more extensive
knowledge regarding the audit profession (Gunasti, 2010). Further, auditors that are
partners in their firms are explained to exercise higher levels of professional scepticism
due to their experience and knowledge (Sayed Hussin et al., 2017). This fact is supported

78
in the analysis where it is found that partners have higher levels of professional
scepticism. In addition, the findings showed that partners are less likely to rely on
CAATs. This could be explained as that older workers possess lower computer skills than
younger employees (Friedberg, 2003; Schleife, 2006) since older workers are more
resistant to computer techniques and innovation (Meyer, 2009).

Findings from the analysis further showed that females, compared to males, apply more
professional scepticism. This is supported by Breesch and Branson (2009) who state that
females are less risk-averse and more conservative compared to males, and could,
therefore, be argued to apply more professional scepticism. Furthermore, findings from
the analysis show that larger audit firms, compared to small audit firms, rely more on the
output from CAATs. This could be explained as that larger audit firms are more likely to
adopt and rely on CAATs. This is partly since larger audit firms often audit larger clients,
where more complex IT systems are required, which increases the use of CAATs.
However, it does also depend on the fact that larger audit firms are able to provide greater
support and training for their employees within various audit software (Bierstaker et al.,
2001; Janvrin et al., 2009). On the other side, smaller audit firms that are not included in
the Big 7 are found to rely less on CAATs. The fact that larger audit firms are more
dependent on CAATs, compared to smaller firms, could be explained as that smaller audit
firms do not possess the same number of large clients and therefore, have the same need
for audit techniques (Curtis & Payne, 2008; Janvrin et al., 2009).

Organizational tenure is found to have a positive effect on CAATs. This means that an
auditor with longer employment within the audit firm relies more on CAATs compared
to an auditor who has worked for an audit firm for a shorter period of time. This could be
explained as that more time within the organization means more time for training and the
use of CAATs (Janvrin et al., 2009). Moreover, the more time the auditor spends on using
the audit techniques provided by the audit firm, the more experience and knowledge can
be acquired concerning CAATs (Bierstaker et al., 2001; Siew et al., 2020).

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 6. Conclusion

___________________________________________________________________________________

In this chapter, an overall conclusion of the study is presented, thereafter the theoretical
and empirical contributions are displayed. Subsequently, the empirical contributions are
brought forward, the chapter is ended with the limitations and suggestions for future
research.
______________________________________________________________________

6.1 Overarching Conclusion

The purpose of this thesis is to investigate the relationship between CAATs and
professional scepticism, and how trait scepticism could influence this relationship, in the
context of Swedish auditors. Findings of this thesis display some interesting conclusions.

The relationship between structure and judgment is a complex and discussed topic
(Power, 2003), and has previously been investigated by several studies (e.g. Bierstaker et
al., 2001; Broberg, 2013; Kinney, 1986; Kosmala MacLullich, 2001; Myers, 1997;
Öhman et al., 2006). It is argued that structure has both a decreasing and increasing effect
on judgment (Kosmala MacLullich, 2001). Broberg (2013) claims that these two concepts
should be seen as complementaries rather than increasing or decreasing each other.
Nevertheless, the majority of the accounting literature argues for a negative relationship
between structure and judgment (e.g. Cushing & Loebbecke, 1986; Kinney, 1986;
Kosmala MacLullich, 2001; Myers,1997; Power, 2003; Schroeder et al., 1996; Smith et
al., 2001). One representation of judgment is the professional scepticism, which is the
product of the auditor’s judgment (Nelson, 2009). Meanwhile, CAATs are one
representation of the structure and are defined as the digital tools used within auditing
(Braun & Davis, 2003; Pedrosa et al., 2019). It is therefore investigated whether CAATs
as a representation of structure has a negative effect on professional scepticism as a
representation of judgment. To investigate this relationship, all Swedish authorized
auditors received an email with an online questionnaire, where 522 auditors decided to
participate. Out of which, 435 answers were usable which provided this thesis with

80
several interesting findings regarding the relationship between CAATs and professional
scepticism.

The results show a positive significant relation between CAATs and professional
scepticism, which indicates that hypothesis 1 is not supported. Since CAATs have a
positive effect on professional scepticism it can be argued that structure in the form of
CAATs, assists and provides guidelines for the professional scepticism, rather than
reduces it. This finding is partly in line with the studies of Bierstaker et al. (2001) and
Kosmala MacLullich (2001), and provides evidence on the positive relationship between
CAATs and professional scepticism.

Another focus of this study was the influence of trait scepticism on the relationship
between CAATs and professional scepticism. Literature shows that individual
characteristics referred to as trait scepticism (Bierstaker et al., 2001), affect the
professional scepticism of an auditor (Hurtt, 2010; Nelson, 2009). The extent to which
CAATs affect professional scepticism is therefore dependent on the individual
characteristics of the auditor, trait scepticism. Trait scepticism was researched to have a
positive moderating effect on the relationship between CAATs and professional
scepticism. The results showed a positive significant effect of trait scepticism on the
relationship between CAATs and professional scepticism, which indicates support for
hypothesis 2. Higher levels of trait scepticism provided a higher positive effect of CAATs
on the professional scepticism. It can, therefore, be argued that through applying higher
levels of trait scepticism, auditors will make more sceptical judgments, increase their
suspicion and exercise more sceptical behaviours, which increases their professional
scepticism (Hurtt et al., 2008; Nelson, 2009; Rose, 2007). Moreover, since professional
scepticism is affected by the individual characteristics, trait scepticism, the effect of
CAATs on the professional scepticism is dependent on the levels of trait scepticism that
the auditor possesses (Bierstaker et al., 2001). Additionally, the results showed that the
statements concerning trait scepticism and professional scepticism are perceived
differently. This means that these two concepts can be argued to measure different aspects
which makes them separate variables, albeit with matching characteristics. This finding
is partly in line with the study of Robinson et al. (2018), suggesting a separation of trait
scepticism and professional scepticism as two different variables.

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6.2 Theoretical Contributions

This thesis contributes to the literature by shedding more light on the complex
relationship between structure and judgment. This relationship is an ongoing debate in
the accounting literature and is more relevant than before since structure within the audit
profession is increasing (Agevall et al., 2018). Prior studies have been made on the
relationship between structure and judgment (e.g. Bierstaker et al., 2001; Cushing &
Loebbecke, 1986; Kosmala MacLullich, 2001; Myers, 1997; Power, 2003; Schroeder et
al., 1996; Stringer, 1981), however, this thesis enriches the literature by investigating the
relationship with the representation of CAATs and professional scepticism. To the
authors’ knowledge, this has not been done before. Moreover, this thesis contributes to
the literature by providing evidence of a positive significant relationship between
structure and judgment in the context of the audit profession in Sweden. Findings of this
study supplements the literature within structure and judgment with evidence of a positive
relationship, where the majority of prior literature argues for a negative relationship (e.g.
Cushing & Loebbecke, 1986; Kinney, 1986; Myers,1997; Power, 2003; Schroeder et al.,
1996; Smith et al., 2001). Findings of the positive direct relationship between the
variables are partly in line with previous literature (e.g. Bierstaker et al. 2001; Kosmala
MacLullich, 2001). However, this literature did not investigate the relationship between
structure and judgment using representations. Therefore, compared to prior research, this
thesis provides a unique contribution to the existing literature, with a more narrow and
specific representation of the relationship between structure and judgment.

This thesis also found evidence that trait scepticism strengthens the relationship between
CAATs and professional scepticism. To the authors’ knowledge, this investigation has
not been done before which provides a new perspective of the relationship. This finding
contributes to the existing literature by providing a new perspective on the relationship
between structure and judgment. Prior studies have investigated trait scepticism (e.g.
Hurtt, 2010; Quadackers et al., 2009; Robinson et al., 2018) where it has been used to
measure professional scepticism but also to explain the behaviour of individuals.
However, it has not been used as a moderating variable, affecting the professional
scepticism. Additionally, it is found that higher levels of trait scepticism are increasing
the positive relationship between CAATs and professional scepticism, meaning that the
higher levels of trait scepticism, the higher is the professional scepticism of an auditor.

82
Investigation of trait- and professional scepticism provided evidence that these two
variables are viewed separately, meaning that they are two different variables. This
finding contributes with a relatively new perspective to the existing literature because
most of the prior literature argues for these two variables being the representation of
professional scepticism (e.g. Anderson et al., 2004; Gramling, 1999; Hurtt, 2010;
Robertson, 2010). However, this finding is in line with Robinson et al. (2018) who argue
that these two variables represent two kinds of scepticism, an individual, trait scepticism,
and a more situational, professional scepticism. Thus, the findings of this study contribute
to the existing literature with evidence that trait scepticism and professional scepticism
are two different concepts, albeit with matching characteristics.

Findings of this study contribute to the literature relying on the profession theory. This is
since auditing is viewed as a profession where the execution of judgments is a
requirement (Brante, 1988; Freidson, 2001). This study contributes to the profession
theory by providing evidence of how auditors can increase their professional judgment.
Furthermore, expertise within a profession is defined as knowledge that cannot be
acquired independently (Brante, 1988). This study provides a new perspective to the
profession through the knowledge that expertise in the form of CAATs can be
implemented to increase auditors professional scepticism. Moreover, the results of this
study contribute to the profession theory by providing evidence that auditors judgment,
represented as professional scepticism, can be increased by their individual
characteristics, trait scepticism. This validates auditing as a profession within the
profession theory since the requirement of judgment within the audit profession can be
fulfilled but also improved.

Moreover, findings of this study also contribute to the literature relying on comfort
theory. Evidence is found that CAATs have an increasing ability in the comfort level of
the Swedish auditors. This is since the implementation of CAATs increases auditors
professional scepticism, which could be argued to increase the comfort level of the
Swedish auditors. In addition, this study provides evidence that judgment and structure,
represented by CAATs and professional scepticism, contribute to the fact that an auditor
becomes comfortable in their work, which increases the audit quality. Lastly, this study
benefits the literature relying on comfort theory by encouraging the implementation of

83
IT-tools in order to increase the comfort level within auditing, which further could be
implemented in other professions.

Furthermore, this study indicates an ongoing modification of the Swedish audit

profession. CAATs are found to increase the level of applied professional scepticism,
despite that the majority of the prior literature argues for a negative relationship (e.g.
Cushing & Loebbecke, 1986; Kinney, 1986; Kosmala MacLullich, 2001; Myers, 1997;
Power, 2003; Schroeder et al., 1996). This could, therefore, indicate that digitalization
within the Swedish audit profession is changing the negative relationship between
structure and judgment towards a positive relationship, where CAATs assist auditors in
their judgment rather than endangers it (Knechel, 2013; Öhman et al., 2006). The positive
relationship between structure and judgment contributes to more effective and efficient
auditing (Bierstaker et al., 2001; Cushing & Loebbecke, 1986; Myers, 1997), and
simultaneously provides a higher audit quality (Peytcheva, 2014). It could, therefore, be
argued that auditors should be encouraged to implement CAATs, where the role of the
audit firms must be training and education of employees within this field.

6.3 Empirical Contributions

This study empirically contributes to the field of auditing by explaining how CAATs
affect the professional scepticism of an auditor and how this relationship is moderated by
trait scepticism. This research contributes to the literature by displaying that within
Swedish auditing firms, CAATs have a positive effect on professional scepticism of the
authorized auditors. This means that, within Swedish audit firms, CAATs assist auditors
in the correct direction of decision making and judgment (Knechel, 2013; Stringer, 1981).
Despite this, it was found that Swedish auditors have a low reliance on CAATs, with a
mean value of 4.87. Which could be the reason why they have to apply higher levels of
professional scepticism when using CAATs. Additionally, authorized auditors with
higher levels of trait scepticism increase their professional scepticism through the
implementation of CAATs. This means that higher levels of trait scepticism are
increasing the level of applied professional scepticism since the auditor is argued to be
more sceptical in nature (Quadackers et al., 2014), which influences the auditor's

84
judgment, decision making and sceptical behaviour (Das & Teng, 2004; Robinson et al.,
2018).

Additionally, this study empirically contributes to the field of auditing through providing
evidence of high professional- and trait scepticism levels within the landscape of Swedish
auditors. The levels of professional scepticism are displayed as a mean value of 8.42,
meaning that the Swedish authorized auditors apply high levels of professional
scepticism. Concerning the levels of trait scepticism, a mean value of 7.71 was identified,
lower than the professional scepticism albeit a relatively high value. Taking into concern
the fact that auditors ranked themselves, this study contributes to the literature by
displaying that Swedish auditors possess high levels of professional scepticism and trait
scepticism.

Moreover, within Swedish audit firms, trait scepticism is an important determinant of

behaviour since it affects the professional scepticism of the auditor (Hurtt, 2010; Nelson,
2009). In addition, execution of professional scepticism is essential in fraud risk
assessment (ISA 200), meaning that higher trait scepticism is important in order to
increase the identification of possible misstatements due to fraud. Lastly, this study
empirically contributes to the audit profession by identifying trait scepticism and
professional scepticism as two separate concepts. The research contributes to the
literature by showing that, within Swedish audit firms, the nature of professional
scepticism is perceived differently compared to the nature of trait scepticism (Robinson
et al., 2018). Moreover, the fact that higher levels of trait scepticism are shown to increase
the professional scepticism means that, within Swedish audit firms, trait scepticism is
perceived as a crucial determinant of professional scepticism and could therefore to a
certain extent be used to increase the professional scepticism of an auditor.

6.4 Practical Implications

As highlighted previously in section 2.5 “Professional Scepticism as a Representation of

Judgment”, auditors are required to exercise professional scepticism in the conduction of
an audit (ISA 200), which implies the importance to know about professional scepticism.
Moreover, it is of great importancfe that auditors apply high levels of professional

85
scepticism when performing different audit tasks since professional scepticism is crucial
in the detection of material misstatements in the financial statements (Beasley et al., 2001;
Quadackers et al., 2014). The results of this thesis can help auditors to gain a better
understanding of how their professional scepticism is affected by CAATs. Furthermore,
the results show a significant moderating effect of trait scepticism on the relationship
between CAATs and professional scepticism. This indicates that auditors’ individual
characteristics, trait scepticism, affects the extent to which CAATs affect professional
scepticism. This further implies the importance of knowing more about professional
scepticism executed by the auditors and factors that influence it.

Additionally, the importance of professional scepticism can be referred back to the large
scandals in the 2000s’. The large scandals in the 2000s show auditors’ inability to exercise
sufficient levels of professional scepticism in certain situations. This led to a decrease in
the public's trustworthiness toward the audit profession (Forsberg & Westerdahl, 2007).
Findings of this study could benefit audit firms by guiding them on how to increase the
professional scepticism of their employees. Evidence that state scepticism, professional
scepticism, can be increased through the individual characteristics of the auditor, trait
scepticism, could assist the audit firms in getting back the trustworthiness of the public.
High levels of trait scepticism increase the suspicious nature of the auditor (Rose, 2007),
and affect the situational scepticism, professional scepticism, through that the auditor
exhibits more sceptical judgments (Nelson, 2009). Since both CAATs and trait scepticism
have a significant effect on professional scepticism they both have an influence over how
much professional scepticism that auditors are able to apply. An example of how this
finding could benefit audit firms, and maybe also other professions, is that if an employee
has low trait scepticism, it will, in the end, affect the execution of professional scepticism
that is required by the auditor in a specific situation. This might lead to an auditor who is
less analyzable, requiring less evidence in the assessment of the financial statements,
which in turn might lead to low audit quality. Recruitment practices should, therefore, be
more focused towards self-confidence, interpersonal understanding and self-
determination, characteristics of trait scepticism. An increased focus on higher levels of
trait scepticism among new auditors will improve their sceptical behaviour. This
highlights the importance of knowing more about the trait scepticism of the auditors.

86
Current audit standards promote the implementation of CAATs as a digital tool in order
to increase the effectiveness of the audit process (e.g. ISA 315; ISA 330). Accordingly,
audit standards highlight the importance of professional scepticism in the audit process
(e.g. ISA 200; ISA 240). However, current standards do not promote the implementation
of CAATs as a digital tool to increase professional scepticism. Findings of this study
could benefit regulators by providing an understanding of the relationship between these
two variables and assist in the improvement of the current standards. Implementation of
CAATs increases auditors professional scepticism since it makes auditors work more
effective and time-efficient (Fay & Negangard, 2017), leaving auditors with more time
on the execution of professional scepticism. Moreover, CAATs assist auditors in their
judgments and decision making, where judgment, in the end, will decide upon on how
and when to use CAATs (Kosmala MacLullich, 2001). The decreased trustworthiness
towards the audit profession as a result of the large corporate scandals in the 2000s’ is
argued to be dependent on insufficient levels of professional scepticism. However, since
findings of this study provide evidence that CAATs increase the professional scepticism
of auditors, it could also be argued that the decreased trustworthiness could be dependent
on, in that time, insufficient development of the digital tools within the audit profession.
Digitalization in the audit profession has led to a more efficient and effective audit process
(Han et al., 2016), where CAATs nowadays assists auditors in fraud risk assessment.
Current standards should, in addition, encourage smaller audit firms (smaller than Big 7)
to use various IT-tools, which were in this study found to rely less on CAATs compared
to the larger audit firms. For audit firms and their partners, the results that education and
training within CAATs has a positive outcome on the professional scepticism can have
positive effects. Where audit firms could focus more on education and training to increase
their employees' knowledge within CAATs. This could not only have a positive effect on
professional scepticism but also on higher effectiveness and improved audit quality.

6.5 Limitations and Future Research

One limitation of this thesis is that it only investigates the Swedish context. This might
not provide an honest observation of the relationship between structure and judgment
since similar research could provide a different result when investigated in another

87
context. In addition, the results of this study are only referring to Swedish audit firms,
which makes it difficult to generalize the results outside Sweden. Investigation of the
same audit firms, however, across different countries would provide more variation in the
findings. However, investigation of audit firms in other countries than Sweden requires a
correct translation into different languages to eliminate misunderstandings in the
concepts. Moreover, this kind of research does not fit into the time limit of this study.
Nevertheless, future research could investigate the relationship between CAATs and
professional scepticism in a different context or include more countries in their research.
Including more countries could provide a higher variation in the empirical evidence,
however also a more accurate result of the relationship.

Another limitation is the low response rate of the data that received a score of 16.8%,
which provides a low level of generalization. This low response rate can be problematic
since there is a greater risk for biases. We expect that the loss of respondents can depend
on several different aspects. First of all, many of the auditors received the questionnaire
during their busiest period of the year. Secondly, it is complicated to receive a high
response rate due to the nature of the surveys. However, additional techniques such as
follow-ups as well as reduction of statements were made to potentially increase the
response rate. One possibility could be to perform interviews which would eliminate a
few of the disadvantages with surveys. A suggestion would be to perform the interviews
during a less busy period of the audit cycle. Nevertheless, the questionnaire is believed
to be a reliable method to perceive valid responses and to make the respondents feel that
they do not have to feel intimidated that their responses will risk their situation at the
audit firm.

Moreover, this study investigates auditors’ trait scepticism and professional scepticism
through letting respondents rank their own scepticism referring to the most complex audit
task they have been involved in. This might not give an honest observation of trait- and
professional scepticism since an auditor could have ranked their scepticism higher than
what it truly is. Alternatively, respondents could have been investigated through letting
their supervisors or colleges rank their scepticism in that specific audit task. However,
this method contains complexity since it requires that each respondent has a supervisor
or a colleague who knows them very well. It also contains complexity since the

88
respondents have to be matched. Nevertheless, an established model, used in prior
research, was used to measure both trait- and professional scepticism, which strengthens
the reliability of the answers. A suggestion for future research is the elaboration of new
models and measures for trait scepticism since there is a clear lack in the literature. More
particularly since existing models incorporate trait scepticism and professional scepticism
into one model.

Another limitation of this study could be the representation of structure and judgment in
the form of CAATs and professional scepticism. Despite the fact that these
representations provide a new perspective into the accounting literature, there exist other
proxies that could be used to investigate this relationship. Moreover, argumentation that
CAATs are a representation of structure is based on sources that could be argued to be
outdated. Technology is a rapidly changing area which means continuous improvements
in the IT-systems of the audit firms. Therefore, CAATs might no longer give an honest
representation of the structure. Nevertheless, the use of CAATs is a structured way of
analyzing data and is well-known and commonly adopted by auditors in various firms.
CAATs and professional scepticism were carefully chosen as proxies to provide a fair
representation of the relationship. Nevertheless, future research could include other
proxies to measure the concepts of structure and judgment. The use of other proxies to
measure the relationship could provide a different result of the relationship between
structure and judgment.

It would further be interesting to investigate a different type of sample, for example

through exploring non-authorized auditors. Since authorization typically requires a few
years within the profession, an examination of non-authorized would provide a lower
average of age and years within the profession. Thereby, it would be interesting to see if
there is a difference among how younger, non-authorized, auditors perceive their
professional scepticism, compared to the older ones.

89
6.6 Reflection

The process of this study commenced at the beginning of the year 2020. Structure and
judgment are a well- discussed topic and is becoming more relevant as we live in a more
digitized world. Moreover, it was found that previous research suggests for separation in
auditors' individual characteristics and their professional scepticism within. These
findings contributed to the idea of investigating the relationship between structure and
judgment with a new perspective, placing trait scepticism as a moderating variable of the
relationship. Furthermore, we wanted to narrow down the wide terms of structure and
judgment to make them clearer and more specific.

This thesis has provided us with new experience and knowledge regarding the audit
profession but also regarding the writing process of a thesis. We have learned that CAATs
have a positive influence on the professional scepticism of the Swedish auditors' despite
the fact that the majority of the existing literature argues for the opposite. This fact
indicates the rapidly changing effect of digitalization and that CAATs can be used to
increase professional scepticism within auditing. Furthermore, the positive effect of trait
scepticism provided us with an understanding of the importance of the individual
characteristics in the audit profession. Since this study is conducted within the Swedish
context, which has not been investigated before, a generalization to all contexts might not
be made. If a larger time span was available for us to conduct this thesis, several other
contexts could have been implemented in the study.

Since digital tools, including CAATs, are becoming more common within the audit
profession, we are bringing grateful knowledge into the coming practical work in the
audit field. Knowing that CAATs are not limiting auditors in their professional scepticism
is meaningful for us to know since it represents a large and important part of the audit
work. This can further be connected to the importance of customer satisfaction in
auditing, where technology can be implemented to fulfil the customers’ expectations and
needs. Finally, knowing that the individual characteristics play a significant role in the
relationship, gives us an understanding of the importance of self-confidence,
interpersonal understanding and self-determining. Meaning that we are bringing with us
the emphasis of confidence into our career within auditing. In conclusion, the findings of

90
this study have provided us with great knowledge but also preparations for the upcoming
working life.

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Accounting Review, 15(1), 89-114.

Östlund, U., Kidd, L., Wengström, Y. & Rowa-Dewar, N. (2011). Combining

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Appendix
Appendix I- Questionnaire in Swedish

Hej,
Våra namn är Alexandra Kantonenko och Therése Karlström, vi läser
Civilekonomprogrammet med inriktningen Revision, på Internationella
Handelshögskolan i Jönköping. Just nu skriver vi vårt examensarbete med ämnet
struktur och omdöme inom revisionsyrket.

Vi skulle vilja be Dig att lägga några minuter av din värdefulla tid till att svara på denna
enkät, vi uppskattar att det tar max. 10 minuter att besvara frågorna.

Uppgifterna kommer att behandlas konfidentiellt och i enlighet med riktlinjerna i

GDPR. Uppgifterna kommer inte att användas i något annat sammanhang än till att
besvara syftet i vårt examensarbete.

Vi är väldigt tacksamma för Ditt deltagande!

Alexandra Kantonenko Therése Karlström

Tfn 0761409150 Tfn 0708556299
kaal16ju@[Link] kath1601@[Link]

Handledare, Senior Associate Professor

Timur Uman
[Link]@[Link]

Sida 1
Generella frågor:
1. Jag är född år: ([Link]. 1970)
2. Hur många år har du arbetat inom den nuvarande organisationen?
3. Hur många år har du arbetat inom revisionsyrket?
4. Är du partner i företaget?
- Ja
- Nej

Sida 2
När du svarar på nedanstående frågor, tänk på dig själv i allmänhet

Var god svara till vilken utsträckning du håller med till följande påstående:
1 = Stämmer inte alls, 10 = Stämmer helt

1. Jag gillar att förstå orsaken bakom andra människors beteende

2. De handlingar människor gör och skälen till dessa handlingar är fascinerande
3. Jag funderar ofta på varför människor uppträder på ett visst sätt
4. Jag ifrågasätter ofta saker jag ser, läser eller hör

106
 5. Det är inte lätt för andra människor att övertala mig
6. Jag lägger ofta märke till inkonsekvenser i förklaringar
7. Jag har förtroende på mig själv
8. Jag är självsäker
9. Jag är säker på mina förmågor

Sida 3
Vänligen tänk på det mest komplexa uppdrag du har reviderat under det senaste året och
besvara följande frågor med avseende på den specifika situationen.

Var god svara till vilken utsträckning du håller med till följande påstående:
1 = Stämmer inte alls, 10 = Stämmer helt

1. Medan jag arbetade med detta uppdrag, ifrågasatte jag påståenden/information

som jag mottog från företaget
2. Medan jag arbetade med detta uppdrag, ifrågasatte jag saker som jag såg eller
läste
3. Medan jag arbetade med detta uppdrag, avvisade jag uttalanden tills dess att jag
hade tillräckligt med information att dem var sanna
4. Medan jag arbetade med detta uppdrag, tog jag inte beslut förrän jag hade tittat
på all tillgänglig information
5. Medan jag arbetade med detta uppdrag, tyckte jag inte om att ta snabba beslut
6. Medan jag arbetade med detta uppdrag, försäkrade jag mig om att jag hade tänkt
igenom det mesta av den tillgängliga informationen
7. Medan jag arbetade med detta uppdrag, väntade jag med att ta beslut tills dess
att jag kunde få mer information
8. Medan jag arbetade med detta uppdrag, sökte jag aktivt efter all den information
som jag kunde
9. Medan jag arbetade med detta uppdrag, tenderade jag att söka efter mer bevis
för att öka mina chanser att uppnå korrekta svar
10. Medan jag arbetade med detta uppdrag, använde jag alla tillgängliga resurser för
att komma åt all den information jag kunde

Sida 4
Vänligen tänk på det mest komplexa uppdrag du har reviderat under det senaste året och
besvara följande frågor med avseende på den specifika situationen.

Var god svara till vilken utsträckning du håller med till följande påstående:
1 = Inte alls 10 = Väldigt mycket

1. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på

datorassisterad revisionsteknik (CAATs) i samband med stickprov?

107
 2. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) vid utvärderingen av lagret, dess
inventering och fullständighet?
3. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) vid identifikation av bokföringsposter
och andra justeringar som skulle testas?
4. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) vid granskning av intern kontroll?
5. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) vid utvärderingen av bedrägeririsk?

Sida 5
Vänligen tänk på det mest komplexa uppdrag du har reviderat under det senaste året och
besvara följande frågor med avseende på den specifika situationen.

Var god svara till vilken utsträckning du håller med till följande påstående:
1 = Inte alls, 10 = Väldigt mycket

1. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på

datorassisterad revisionsteknik (CAATs) i planeringsstadiet?
2. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) i granskningsprocessen?
3. Medan du arbetade inom det uppdraget, i vilken mån förlitade du dig på
datorassisterad revisionsteknik (CAATs) i rapporterings stadiet?
Sida 6
Tack för Ditt deltagande i våran undersökning om struktur och omdöme. Om Du är
intresserad av den slutliga versionen av vårat examensarbete, var god lämna din e-
postadress nedan så sänder vi den till dig när den är färdigställd.

Tack för Din tid!

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Appendix II- Questionnaire in English
Hi,
Our names are Alexandra Kantonenko and Therése Karlström and we are studying a
master in business administration with a major within accounting at Jönköping
International Business School. We are currently writing our master thesis within the
subject of structure and judgment within the audit profession.

We would kindly like to ask You to spend a few minutes of your valuable time to
answer a questionnaire. We estimate that it will take a maximum of ten minutes to
answer the questions.

The data will be treated confidentially and in accordance with the guidelines of the
GDPR. The information will not be used in any other context than to answer the
purpose of our thesis.

We are very grateful for Your participation!

Alexandra Kantonenko Therése Karlström

Tfn 0761409150 Tfn 0708556299
kaal16ju@[Link] kath1601@[Link]

Supervisor, Senior Associate Professor

Timur Uman
[Link]@[Link]

Page 1
General questions
1. I am born in: (e.g. 1970)
2. How many years have you worked within the current organization?
3. How many years have you worked within the audit profession?
4. Are you a partner within the company?
- Yes
- No

Page 2
When answering these questions, think of yourself in general

Please rank to which extent you agree with the following statements.
1= Strongly disagree, 10= Strongly agree

1. I like to understand the reason for other people’s behaviour

2. The actions people take and the reasons for those actions are fascinating
3. I seldom consider why people behave in a certain way

109
 4. I usually question things I see, read, or hear at face value
5. It is not easy for other people to convince me
6. I usually notice inconsistencies in explanations
7. I have confidence in myself
8. I am self-assured
9. I am confident of my abilities

Page 3

Please think of the most complex assignment you have audited during the past year and
answer the following questions regarding that specific situation.

Please rank to which extent you agree with the following statements.
1= Strongly disagree, 10= Strongly agree

1. While working on that case, I tended to question the statements that I received
from the company
2. While working on that case, I frequently questioned the things that I saw or read
3. While working on that case, I tended to reject statements unless I had proof that
they were true
4. During that case, I did not like to take decisions until I had a chance to look at
all the available information
5. While working on that case, I did not like having to make decisions quickly
6. While working on that case, I liked to ensure that I considered most available
information
7. While working on this case, I waited to make decisions until I could get more
information
8. While completing that case, I actively sought out all the information that I could
9. While working on that case, I searched for more evidence to improve my
chances of getting the correct answers for the case
10. While working on that case, I used all the resources available to me to get all
the information that I could

Page 4

Please think of the most complex assignments you have audited during the past year and
answer the following questions regarding that specific situation.

Please rank to which extent you agree with the following statements.
1= Not at all, 10= Very much

1. While working on that case, how much did you rely on CAATs when testing
samples?

110
 2. While working on that case, how much did you rely on CAATs in the evaluation
of inventory existence and completeness?
3. While working on that case, how much did you rely on CAATs when
identifying journal entries and other adjustments to be tested?
4. While working on that case, how much did you rely on CAATs in the aspect of
internal controls?
5. While working on that case, how much did you rely on CAATs when evaluating
fraud risk?

Page 5

Please think of the most complex assignment you have audited during the past year and
answer the following questions regarding that specific situation.

Please rank to which extent you agree with the following statements.
1= Not at all, 10= Very much

1. While working on that case, how much did you rely on CAATs in the planning
stage?
2. While working on that case, how much did you rely on CAATs in the execution
stage?
3. While working on that case, how much did you rely on CAATs in the reporting
stage?

Page 6

Thank you for Your participation in our survey on structure and judgment. If You are
interested in the final version of our master thesis, please leave your e-mail address
below and we will send it to you when it is completed.

Thank you for Your time!

111