The Effect of a Prompt to Adopt the Prudent Official's Perspective on Auditors' Judgments of the Severity of Control Deficiencies

SUMMARY Regulators have expressed concerns about auditors' tendency to over-rely on imprecise compensating controls when evaluating the severity of control deficiencies. We provide evidence on whether prompting auditors to use a prudent official's evaluative perspective will mitigate this tendency. We hypothesize that auditors who are prompted to adopt the prudent official's perspective evaluate compensating controls and the severity of control...