Assessing the Relationship Between Auditor Professional Skepticism and Detection of Fraudulent Activities

Posted: Jul 09, 2025

• Chase Harper
• Gage Simmons
• Natalie Banks

Abstract

The critical role of professional skepticism in auditing has been extensively acknowledged in both academic literature and professional standards, yet the precise nature of its relationship with fraud detection effectiveness remains inadequately understood. Traditional research approaches have predominantly relied on self-reported survey data and experimental simulations that capture only limited dimensions of this complex psychological construct. This study introduces an innovative computational framework that transcends these methodological limitations by employing machine learning techniques to analyze the multi-faceted nature of professional skepticism and its impact on fraud detection performance. Professional skepticism represents a cornerstone of audit quality, embodying the auditor's questioning mind and critical assessment of audit evidence. Regulatory bodies and standard setters consistently emphasize its importance, particularly in the context of fraud detection where cognitive biases and time pressures can compromise judgment quality. However, the auditing profession faces persistent challenges in effectively cultivating and measuring appropriate levels of skepticism, as evidenced by continuing audit failures and regulatory criticisms. Our research addresses several fundamental gaps in the existing literature. First, we move beyond the simplistic treatment of skepticism as a unidimensional construct by developing a comprehensive measurement framework that captures its cognitive, behavioral, and affective components. Second, we employ computational methods that enable the analysis of complex, non-linear relationships that traditional statistical approaches may overlook. Third, we investigate how different manifestations of skepticism influence various types of fraud detection, recognizing that skepticism may operate differently depending on the nature of the fraudulent activity.