The Effect of the Framing of Coaching Guidance and Communication Mode on Auditors’ Professional Scepticism

Abstract

Regulators have expressed concerns about the level of professional scepticism of auditors, especially when performing remote auditing. This thesis examines the effect of virtual coaching guidance to enhance professional scepticism of auditors with varying levels of audit experience.

Given the importance of communication to reinforce professional scepticism, Study 1 examines the effectiveness of the expression of virtual coaching guidance, expressed either to promote desirable behaviours that positively affect audit quality (promotive coaching) or to prohibit undesirable behaviours that negatively affect audit quality (prohibitive coaching). The results show that the effect of the type of coaching varies with the experience of the coachee. After controlling for coaching goal relevance, less experienced auditors provide marginally more sceptical judgments when receiving promotive coaching, but this is not the case for more experienced auditors. More experienced auditors select actions they believe to be marginally more sceptical when receiving prohibitive coaching, but this is not the case for less experienced auditors.

Given the changing nature of auditors to work partially or fully remotely, Study 2 examines the effectiveness of the delivery of virtual coaching guidance, delivered virtually via either video or audio. Study 2 provides evidence that video coaching can be more effective than audio coaching in enhancing sceptical judgments of less experienced auditors but not of more experienced auditors.

This thesis contributes to the literatures on auditors’ learning and on professional scepticism by showing that, when coaching methods match with audiences and tasks, coaching can enhance professional scepticism. This thesis should also be of interest to auditors, audit firms, and audit regulators. This thesis informs auditors that it is important that they consider audit experience of coachees when providing coaching. It also provides guidance of how audit firms should train auditors to provide coaching. and informs audit regulators about the importance of the design of coaching activities in audit firms.