Long-term effect of economic status on auditors' professional skepticism

Abstract

The goal of the current study was to look into how financial stability affected auditors' professional skepticism. One of the elements that reflects the level of an auditor's professional skepticism in the auditor's choices is prior job experience. Regarding this, 759 businesses registered on the Iraq Stock Exchange were chosen between 2011 and 2021 using the systematic elimination approach. Due to the 2D structure of the logistic dependent variable, the research's regression model was put to the test. The outcome of the research hypothesis test revealed that the auditor's decision-making and judgment were significantly impacted by the economic climate at the start of their assignment. Additionally, it was discovered that businesses that have their financial reports audited by auditors during a recession are less inclined to do so. Our study supported prior research on a range of demographics, including economists, scientists, attorneys, investment bankers, and corporate executives, by demonstrating that the early career stage is a crucial era for auditors' formative development. Our findings may have wide-ranging repercussions for the auditing industry. Our findings imply that there may be a dearth of skeptic auditors in a region following extended periods of economic expansion. Our research serves as a first step in the direction of a deeper comprehension of the formation and recruitment of auditors in the labor market.