Investigating the Effect of Cognitive Styles on Auditors'Ability to Detect Fraud

Subject Areas :

Nahid Rezaei ¹ , زهرا دیانتی دیلمی ² , Reza Gholami Jamkarani ³ , Fraydoon Rahnamay Roodposhty ⁴

1 - PhD Student in Accounting, Qom Branch, Islamic Azad University, Qom, Iran
2 - Associate Professor and Faculty of Accounting, Kharazmi University, Tehran, Iran
3 - Department of Accounting, Qom Branch, Islamic Azad University, Qom, Iran
4 - Department of Accounting, Science and Research Branch, Islamic Azad University, Tehran, Iran

Received: 2022-08-11 Accepted : 2024-07-03 Published : 2024-07-02

Keywords: Fraud Detection, Misappropriation of Assets, Cognitive Styles, Professional Skepticism and Auditor,

Abstract :

Fraud (misappropriation of assets, financial corruption and fraud in financial statements) is a major problem in every type of industry and institution. Misappropriation of assets has the highest frequency of fraud in different societies. According to the documentation theory, the performance of people (detection of fraud and misappropriation of assets) is caused by internal tendencies and individual characteristics (cognitive styles); or external, environmental conditions and job requirements (professional skepticism) or both factors. Therefore, the aim of the present study is to investigate the effect of auditors' cognitive styles (internal characteristics) on the ability to detect misappropriation of assets, emphasizing the mediating role of professional skepticism (external factor). This research is of applied and survey type. The statistical population includes working auditors who are members of the official accountants society of Iran in the year 1400; 375 people who were selected using random sampling. data was collected through a questionnaire and analyzed using structural equation modeling with the Partial Least Squares (PLS) approach. The results show that abstract-random, abstract-sequential, objective-sequential and objective-random cognitive styles respectively have the greatest effect on the ability to detect misappropriation of assets and professional skepticism mediates their relationship is crying. The professional skepticism of the auditors also increases the ability to discover the misappropriation of assets. The findings indicate that abstract auditors relying on the power of their intuition and reasoning are more successful than objective auditors who perform evaluations based on what they see.