The effects of source integrity and consistency of evidence on auditors' judgments

This study uses the Elaboration Likelihood Model as a theoretical framework to examine auditors' sensitivity to the integrity of an evidence source, t he consistency of more than one piece of evidence and the interaction betwe en these two factors. Two independent scenarios were examined. The first in volved evidence provided by a source external to the client, namely a lawye r acting for the client in a lawsuit concerning patent infringement. Source integrity was manipulated as either high or low, while the evidence provid ed by the source was either consistent or inconsistent with evidence obtain ed from within the client. Participants assessed the likelihood that the cl ient would be found guilty of patent infringement and whether any liability should be recognized in the financial statements. Both the integrity and c onsistency factors and their interaction were significant in explaining aud itors' judgments. The second scenario involved representations from client management concerning inventory obsolescence. Management integrity was mani pulated as high or tow and the evidence provided by management was either c onsistent or inconsistent with other evidence obtained from within the clie nt. Participants assessed the likelihood that inventory was overstated and that a further writedown was required. For this scenario, only the integrit y factor was it significant determinant of auditors' judgments.