Skills, Knowledge, and Attitudes Important for Present‐Day Auditors

• Date: 01 November 2014
• Author: Harshini P. Siriwardane,Billy Kin Hoi Hu,Kin Yew Low
• Published date: 01 November 2014
• DOI: http://doi.org/10.1111/ijau.12023

Skills, Knowledge, and Attitudes Important for Present-Day Auditors

Harshini P. Siriwardane,1Billy Kin Hoi Hu2and Kin Yew Low2

1James Cook University

2Nanyang Technological University

Recent accounting scandals have challenged and transformed the present-day role of auditors, making it timely

and important to re-examine the skills, knowledge, and attitudes (SKAs) required of auditors in today’s business

environment. While prior studies have examined SKAs of accountants and internal auditors, and personal

attributes of auditors, there is little research on auditors’ SKAs. We propose and examine 20 SKAs important to

present-day auditors. We survey experienced auditors in Singapore about the importance of these SKAs. Our

participants rate professional integrity, assessing audit evidence, and having a questioning mind (indicative of

professionalism competency) as the three most important SKAs. The participants also assess entry-level auditors’

(ELAs) performance for each SKA. The difference between their importance and performance ratings is largest for

business competency, particularly for knowledge of client’s business. Our findings have implications for various

accounting constituencies in terms of developing auditors’ competencies.

Key words: Skills, knowledge, attitudes, competencies, importance-performance gap, auditors

INTRODUCTION

Every year since the turn of the millennium, at least one

highly publicized accounting scandal has been reported

somewhere in the world. While the epicenter of these

scandals is in the US in the 2001–2002 time period (with

the Enron and WorldCom scandals), many other

countries have witnessed at least one scandal during the

current millennium. Some examples of accounting

scandals that occurred outside the US are One.Tel

(Australia), Parmalat (Italy), Royal Ahold (Netherlands),

Nortel (Canada), ComRoad AG (Germany), Satyam

Computer Services (India), Sino Forest (Canada/India),

La Polar (Chile), and Olympus (Japan). Often, accounting

scandals are associated with audit failures.

A common question that follows any accounting

mishap is ‘who is to blame?’ Often, the blame for

accounting scandals has been (and still is) on auditors

(Alsop, 2003; Merritt, 2003; Lumb, 2012), despite the

acknowledgement by both auditing regulators and

researchers that auditquality is a joint function of auditor

and auditee (Antle & Nalebuff, 1991).According to Curd

and Thorpe (2008), while auditors have no obligation to

prevent fraud, they have an obligation to detect fraud, so

that it would not continue. While detecting fraud is

neither the only nor the main duty of auditors, society is

getting tired of hearing about accounting scandals year

after year. As a result, at the minimum, society expects

auditors to carry out the duties expected of the

profession. Therefore, the follow-up question (after

asking who is to blame) relating to accounting scandals

is: ‘Did the auditors carry out their duties and obligations

competently, diligently, and objectively?’ According to

the International Federation of Accountants (IFAC), ‘the

objective of the auditor is to identify and assess the risks

of material misstatements, whether dueto fraud or error’

(IFAC, 2010c, p. 264). Undoubtedly, with the increasing

occurrence of scandals and audit failures throughout the

world, the performance of auditors is under greater

scrutiny by both the regulators as well as the public

(Gandel, 2008; Johnson, 2010; Nuthall & Verma, 2011).

While establishing whether or not auditors are to blame

for accounting scandals is beyond the scope of this study,

identifying the skills, knowledge, and attitudes (SKAs)

that auditors need to discharge their duties competently,

diligently, and objectively in the current business and

regulatory environment is the focus of this study. In this

study, we pay specific attention to the current audit

environment – one where the auditing profession is more

stringently regulated and society places higher

expectations and responsibilities on auditors than it has

ever before. We are also interested in knowing the order

of importance for the SKAs examined. Another question

that our study aims to answer is, ‘How well do

entry-level auditors (ELAs) perform in each of the

SKAs?’1

Given the fluidity of audit-related regulations and the

frequency of accounting scandals, one would think that

these questions must have been addressed before. To our

surprise, we find that the auditing literature is void of

studies on auditors’ SKAs; the accounting literature

contains onlycompetency studies of accountants, internal

auditors, and management accountants. Auditing

research has focused on topics to be covered in a

university’s auditing courses and on personal attributes

(also referred to as personality traits or personal

characteristics) of expert auditors. Needless to say,

accounting competency studies do not examine auditors’

SKAs. Furthermore, we believe that extant auditattribute

studies will not undermine the importance of our study

for two reasons. Firstly, all auditor attribute studies were

conducted before Enron and other major accounting

scandals, and the regulatory changes that followed.

Therefore, these studies maynot reflect the demands that

the new auditing environment has placed on the auditing

profession. Secondly, personal attributes considered in

prior studies are built on an inventory of psychological

characteristics of experts developed by Shanteau (1987).

Medical research clearly distinguishes the difference

between innate abilities (produced by the mind or which

are inherent) and acquired skills (Hollandar, Holland &

Atthowe, 1988; Suksudaj et al., 2012). Personal attributes

considered in prior studies are largely innateabilities. Tan

and Libby (1997) also agree that personality attributesare

Correspondence to: Harshini P Siriwardane, James Cook University,

600 Upper Thomson Rod, Singapore 574421. E-mail: harshini

.siriwardane@jcu.edu.au

International Journal of Auditing doi:10.1111/ijau.12023

Int. J. Audit. 18: 193–205 (2014)

© 2014 John Wiley & Sons Ltd ISSN 1090-6738