Audit Intelligence and Audit Survival An Empirical Research of Tax Auditor

137
AUDIT INTELLIGENCE AND AUDIT SURVIVAL:

AN EMPIRICAL RESEARCH OF TAX AUDITORS (TAs) IN THAILAND

Sudarat Pongsatitpat, Mahasarakham Business School, Mahasarakham University, Thailand
Phapruke Ussahawanitchakit, Mahasarakham Business School, Mahasarakham University, Thailand
Kesinee Muenthaisong, Mahasarakham Business School, Mahasarakham University, Thailand

ABSTRACT

This study investigates the effects of audit intelligence, audit value increase, audit report quality and
financial information usefulness on audit survival of TAs in Thailand. Long-term audit vision, audit morality
mindset, audit learning competency, regulatory force and stakeholder pressure become the antecedents
of audit intelligence by using valuable audit experience as the moderator. In this study, 209 TAs in
Thailand are the sample. The results indicate that audit intelligence influences audit value increase, audit
report quality and financial information usefulness of TAs in Thailand. The results also present that long-
term audit vision, audit morality mindset, audit learning competency, regulatory force and stakeholder
pressure are the antecedents of that audit intelligence. Furthermore, audit value increase and financial
information usefulness have a positive influence on audit survival. Finally, the advantages of audit
intelligence will reach to long-term audit vision, audit morality mindset, audit learning competency,
regulatory force and stakeholder pressure to support the auditors work and enhance audit survival.

Keywords: Audit Intelligence, Audit Survival, Internal Control Evaluation, Operational Risk Assessment,
Best Audit Practice Focus, Audit Planning Orientation, Audit Review Awareness, Audit Information
Integration Concern, Long-term Audit Vision, Audit Morality Mindset, Audit Learning Competency,
Regulatory Force, Stakeholder Pressure, Valuable Audit Experience

1. INTRODUCTION

Todays business environment is changing greatly due to economic forces that result in the need to speed
up product and service development, the redesign of systems to decrease cost, and the focus regarding
customers satisfaction. Accounting research has increasingly been concerned with investigating
professional expertise (Gendron, Cooper, and Townley, 2007). Auditing has always been a business.
However, during the 1980s and 1990s, the audit approaches of large firms changed and evolved as the
economics of auditing became more sensitive (Power, 2003).

Auditing increases added value by providing professional assurance for the accuracy and reliability of
financial information (Watt and Zimmerman, 1983), and stakeholders can depend on audited financial
statements for decision-making in business (Hopwood, Mckeown and Mutchler, 1989). Jeppesen (1998)
is right in stating that the big accounting firms now attempt to distinguish themselves by adding value to
audit. Auditors attempt to develop the process of auditing and the information must reflect truth and
fairness. Auditors should have the intelligence to ensure that the appropriate level of the evidence
obtained is sufficient and appropriate for the purposes of auditing to enhance the credibility of financial
statements for material misstatement. The performance of the external auditors plays an important role
and an effective audit plays critical roles in investor protection (Newman, Patterson, and Smith, 2005).
The stakeholders require superior services to prevent fraud in the financial statements (Peecher,
Schwartz, and Solomon, 2007).

Auditing standards require that auditors assess all relevant evidence in an unbiased and objective
method (Guiral, Ruiz and Rodgers, 2011), and require auditors to consider the reliability of the evidence
they use in making judgments (Reimers and Fennema, 1999). The auditors must audit financial reports
which were prepared, based on generally accepted accounting principles such as accruals, consistency,
going concern and basis conservation (Martin, 2007). Auditors must comply with auditing standards that
are the basis for best practices in auditing. Auditors with more knowledge about going concern and how
to examine problems in that area make more accurate judgments about the probability of client failure
(Choo, 1989). This greater ability leads to better performance in auditing tasks, requiring more judgment
(Libby and Tan, 1994).
138

Auditing is now more than just a technical matter. It is no longer the generic audit designed just to meet
statutory requirements. Auditing has now become an avenue for adding value to clients businesses.
Especially, industry audit expertise involves developing constructive ideas to assist clients, including
providing new insights or solutions to some of the issues clients face in their respective industries (Kend,
2002). An industry audit expert requires a detailed knowledge of the operating environment of the clients
industry. This assists them to better understand the risks that their clients manage and the dynamics and
processes of their clients businesses. An audit firm is exposed to many industry views, and the audit firm
tends to view an industry through the eyes of several clients. This allows the audit firm to provide
individual clients with several insights into their own industry, and therefore adds value to the service
provided to that client, above and beyond the knowledge and insights which the client could provide
(Kend, 2002).

Audit intelligence represents knowledge which allows expert auditors to perform auditing tasks faster, with
greater consistency, and to achieve a higher quality of decision-making. Previous studies show that
auditors who are intelligent in the audit task will take advantage of identifying problems, assessing risk,
evaluating evidence, and performing skeptical judgment (Nelson, 2009). Auditing is a challenging task,
particularly when faced with the critical issue of an auditors professional judgment to solve their clients'
problems. Clients request professional service with a high quality of staff intelligence. Tan and Libby
(1997) found that while tacit managerial knowledge is important for superior performance at the audit
manager level, technical skills are important for superior performance at the staff level. The problem-
solving abilities distinguish superior performance at the senior rank. These findings suggest that while
personality/social attributes such as tacit managerial knowledge are more important for superior
performance at higher professional ranks, judgment/technical skills are more important for superior
performance at the lower professional ranks. The quality of financial statement audits is dependent on the
job performance of auditors. Our understanding of the determinants of auditor job performance has
evolved from concentration on the quality of judgments made based on technical knowledge and ability,
to overall job performance. This includes tacit knowledge of a broad set of performance attributes,
including the ability to objectively evaluate subordinates. However, relatively little is known about what
distinguishes auditors whose overall job performance is relatively superior (McKnight and Wright, 2011).

The early literature on intelligence in auditing focused on technical knowledge (Weber, 1980) and
problem-solving ability (Bonner and Lewis 1990). Koletar (2006) predicates that intelligence and audit
functions are similar to each other and ask essentially the same question, although for different reasons:
There is something going on out there that I should be concerned about. Ashton (1991) and Bonner and
Lewis (1990) found that industry expertise was positively correlated with an auditors ability to identify
problems within financial statements. Likewise, audit intelligence is defined as the ability to apply specific
skill to perform complex audit tasks and provide more superior quality service than competitors (Bedard,
1991; Bedard and Chi, 1993). Abbott and Parker (2000) identify industrial specialization as an auditor
who acquires specific skill, experience and knowledge of a client industry and utilizes such skill to
complete the audit task and provide a higher quality of audit service to his clients. Moreover, auditors with
high experience will gain more effective risk assessment (Bedard and Wright 1994; Yang, Moyes, Din,
and Omar, 2010). In this study, audit intelligence is defined as the expertise of auditors including specific
skills and experience to perform more complex audit tasks and provide more superior quality service than
other auditors.

The importance of audit intelligence increases for the audit professional. Consequently, this research
attempts to expand and contribute to audit intelligence. This research applies two theoretical frameworks,
including the theory of successful intelligence and the contingency theory to describe the relationship
between audit intelligence and audit survival. Moreover, this research concentrates on six dimensions of
audit intelligence, comprising: internal control evaluation, operational risk assessment, best audit practice
focus, audit planning orientation, audit review awareness and audit information integration concern.

Prior studies have hardly examined the impact of audit intelligence on subsequent audit actions such as
audit value, audit report and financial information, which can have an effect on audit survival. This
research is one of the first known investigations to directly link audit intelligence to audit survival and to
139

test the mediating effects of audit value increase, audit report quality and financial information usefulness
in the audit intelligence - audit survival relationship. Thus, the motivation of this study is to find if the
auditor is expected to survive in a profession in which audit expertise leads to achievement.

Thus, the motivation of this study is to investigate the effect of audit intelligence on audit value increase,
audit report quality, financial information usefulness, and audit survival in the context of Thailand. The key
research question of this research is How does audit intelligence affect audit survival? The specific
research questions are as follows: (1) How does each dimension of audit intelligence influence audit
value increase, audit report quality and financial information usefulness? (2) How do audit value increase,
audit report quality and financial information usefulness affect audit survival? (3) How do five
antecedents: long-term audit vision, audit morality mindset, audit learning competency, regulatory force
and stakeholder pressure have an effect on each dimension of audit intelligence? And, (4) How does
valuable audit experience moderate the relationships among five antecedents: long-term audit vision,
audit morality mindset, audit learning competency, regulatory force and stakeholder pressure; and each
dimension of audit intelligence?.

The key purpose of this research is to examine the relationships between audit intelligence and audit
survival. Also, the specific research purposes are as follows: (1) to examine the relationships among the
dimensions of audit intelligence (internal control evaluation, operational risk assessment, best audit
practice focus, audit planning orientation, audit review awareness and audit information integration
concern), audit value increase, audit report quality and financial information usefulness; (2) to study the
relationships among audit value increase, audit report quality, financial information usefulness and audit
survival; (3) to determine the relationships among long-term audit vision, audit morality mindset, audit
learning competency, regulatory force, stakeholder pressure and dimensions of audit intelligence (internal
control evaluation, operational risk assessment, best audit practice focus, audit planning orientation, audit
review awareness and audit information integration concern); and, (4) to examine the moderating effect of
valuable audit experience that affects the relationships among long-term audit vision, audit morality
mindset, audit learning competency, regulatory force, stakeholder pressure and dimensions of audit
intelligence (internal control evaluation, operational risk assessment, best audit practice focus, audit
planning orientation, audit review awareness and audit information integration concern).

This study is organized as follows. The first section provides the theoretical framework of this study,
including the literature review and hypotheses. The second describes the research design, sample,
procedure, and variable measurements of each construct in this study. The third provides the results and
discussion. The fourth provides theoretical and managerial contributions for future research. The last
provides the conclusion.

2. THEORETICAL FOUNDATION

This research implements two main theories to define the meaning of audit intelligence, which are the
theory of successful intelligence and the contingency theory.

Theory of Successful Intelligence
Theory of Successful Intelligence (Sternberg, 2005) is applied to explain the superior attribute of audit
intelligence that provides a more comprehensive description of intellectual competence of human ability.
The Theory of Successful Intelligence is defined as an individuals assessment of success in life by the
individuals own (idiographic) standards and within the individuals socio-cultural context. Success is
achieved by using combinations of analytical (evaluate, judge, or compare and contrast), creative
(problem-assessing, or how well an individual can cope with relative novelty) and practical (adapt to,
shape, and select) intelligence. These three aspects are referred to as processing skills. The processing
skills are applied to the pursuit of success through what were the three elements of practical intelligence:
adapting to, shaping of, and selecting of ones environments. The mechanisms that employ the
processing skills to achieve success include utilizing ones strengths and compensating or correcting for
ones weaknesses (Stemler and others, 2009). Furthermore, all of three abilities of the theory of
successful intelligence analytical, creative, and practical can significantly predict performance.

140

This research explains audit survival as the successful intelligence of TAs through the intelligence
attribute of the six dimensions of audit intelligence. Furthermore, five antecedents are treated as
processing skills to achieve intelligence. Thus, TAs who have superior long-term audit vision, audit
morality mindset, audit learning competency, regulatory force and stakeholder pressure are more likely to
gain intelligence attribute, audit intelligence, and achieve successful intelligence, namely, audit survival.

Contingency theory
Contingency theory is applied to describe how audit intelligence achieves audit survival in a dynamic
situation. Based on the contingency theory, organizational structure is a function of context, and this
context is simultaneously determined by the external environment, history, and other organizational
factors (Anderson and Lanen, 1999). Moreover, organizational structure becomes a competitive strategy
to enhance organizational performance, which depends on a variety of endogenous and exogenous
contextual factors and audit practice. Exogenous factors are the environmental factors or external factors
such as competition and environmental uncertainty (Govindarajan, 1984), whereas endogenous factors
are the organizational factors or internal factors such as implementation capability and culture.

Especially, this research attempts to adapt the structural contingency theory to explain the relationship
between the context and nature of audit experience that survives in the audit profession. The assumption
of the contingency theory is the contingency factor which is relevant to auditor intelligence. In this
research, contingency theory describes the moderating effects of valuable audit experience in the
relationships between audit intelligence and antecedents (long-term audit vision, audit morality mindset,
audit learning competency, regulatory force and stakeholder pressure). Valuable audit experience is
viewed as the exogenous factors in auditing, affecting competitive advantage that has an effect on
increasing the number of auditors and audit performances.

3. RELEVANT LITERATURE REVIEWS AND RESEARCH HYPOTHESES

The audit intelligence, audit value increase, audit report quality, financial information usefulness, and
audit survival relationships of TAs in Thailand are elaborately examined. The conceptual, linkage, and
research model presents the aforementioned relationships, as shown in Figure 1.

3.1 Audit Intelligence
The importance of audit intelligence increases for the audit professional. Audit intelligence represents
knowledge which allows expert auditors to perform auditing tasks faster, with greater consistency, and to
achieve a higher quality of decision-making. Previous studies show that auditors who are intelligent in the
audit task will take advantage of identifying problems, assessing risk, evaluating evidence and performing
skeptical judgment (Nelson, 2009). Auditing is a challenging task, particularly when faced with a critical
issue involving an auditors professional judgment to solve their clients' problems. Clients request
professional service with a high quality of staff intelligence. Tan and Libby (1997) found that while tacit
managerial knowledge is important for superior performance at the audit manager level, technical skills
are

141

FIGURE 1
CONCEPTUAL MODEL OF THE RELATIONSHIPS AMONG AUDIT INTELLIGENCE,
AUDIT VALUE INCREASE, AUDIT REPORT QUALITY, FINANCIAL INFORMATION USEFULNESS,
AND AUDIT SURVIVAL

important for superior performance at the staff level. The problem-solving abilities distinguish superior
performance at the senior rank. These findings suggest that while personality/social attributes such as
tacit managerial knowledge are more important for superior performance at higher professional ranks,
judgment/technical skills are more important for superior performance at the lower professional ranks.
The quality of financial statement audits is dependent on the job performance of auditors. Our
understanding of the determinants of auditor job performance has evolved from concentration on the
quality of judgments made based on technical knowledge and ability to overall job performance. This
includes tacit knowledge of a broad set of performance attributes, including the ability to objectively
evaluate subordinates. However, relatively little is known about what distinguishes auditors whose overall
job performance is relatively superior (McKnight and Wright, 2011). Auditors must perform in accordance
with professional standards such as accounting and auditing standards. Auditors should plan and control
audit task to sufficiently compile information and evidence in audit practice.

The early literature on intelligence in auditing focused on technical knowledge (Weber, 1980) and
problem-solving ability (Bonner and Lewis 1990). Koletar (2006) predicates that intelligence and audit
functions are similar to each other and ask essentially the same question, although for different reasons:
There is something going on out there that I should be concerned about. Ashton (1991) and Bonner and
Lewis (1990) found that industry expertise was positively correlated with an auditors ability to identify
problems within financial statements. Likewise, audit intelligence is defined as the ability to apply specific
skill to perform complex audit tasks and more over provide superior quality service over that of
competitors (Bedard, 1991; Bedard and Chi, 1993).

Abbott and Parker (2000) identify industrial specialization as an auditor who acquires specific skill,
experience and knowledge of client industry, and utilizes such skill to complete the audit task and provide
a higher quality of audit service to his clients. Moreover, auditors with high experience will gain more
effective risk assessment (Bedard and Wright 1994; Yang, Moyes, Din, and Omar, 2010). In this
research, audit intelligence is defined as the expertise of auditors, including specific skills and experience
to perform more complex audit tasks and provide more superior quality service than other auditors
(Nelson, 2009).

142

3.1.1 Internal Control Evaluation
Based on the importance of the internal controls of professional auditing, auditors have responsibilities to
help the client recognize internal controls and the important roles played in corporate governance. The
primary objectives of the auditing standard-setters are to improve accuracy, reliability of corporate
disclosures, reliable financial reporting and to restore investor confidence. Auditing standards are
required to report assessments of the effectiveness of the firms internal controls.

There is a rapidly-growing literature in the fields of accounting and auditing on internal control that relates
to financial statements (Ashbaugh-Skaife and others, 2008; Li and Rego, 2008), corporate governance
(Engel, Hayes and Wang, 2007; Krishnan, 2005) and auditing (Ettredge, Li and Sun, 2006). The reliability
of financial statements is claimed to be a function of a firms internal control effectiveness. Internal control
provides reasonable assurance regarding the reliability of financial statements and prepares financial
statements for external purposes in accordance with generally accepted accounting principles.

As mentioned above, in this research, internal control evaluation is defined as an evaluation of watching
and checking internal control carefully in order to disclose operations and comply with applicable laws
and regulations. Internal control is relevant to the audit practice of preparing financial statements that are
fairly presented in conformity with generally accepted accounting principles. Auditors obtain an in-depth
understanding of the internal control structure and internal control evaluation under audit practices to be
able to detect material misstatements in a clients financial statements. Therefore, audit value increase,
audit report quality and financial information usefulness are under the influence of internal control
evaluation. Thus, the hypothesis is proposed as follows:

Hypothesis 1: The higher the internal control evaluation, the more likely that auditors will gain
greater (a) audit value increase, (b) audit report quality, (c) financial information usefulness, and
(d) audit survival.

3.1.2 Operational Risk Assessment
The importance of risk assessment as a basis for audit practice is investigated with regard to audit
effectiveness (ODonnell and Schultz, 2005; Wilks and Zimbelman, 2004; Elliott, 2002). The relevant risk
reliability of financial reports is associated with specific events or transactions. Prior research indicates
that risk assessment has provided for audit effectiveness as related to financial statements. Risk
assessment has an effect on audit effectiveness.

The risk assessment process for financial statements is defined as identification, analysis, and
management of risks relevant to the preparation of financial statements that are presented fairly in
conformity with generally accepted accounting principles. Risks relevant to financial statements include
external and internal events, and circumstances that may occur and affect an ability to initiate, authorize,
record, process and report financial data consistent with the assertions of management in the financial
statements (Chang and others, 2008). The risk assessment process for financial report purposes is
identification, analysis, and management of risks relevant to the preparation of financial statements that
are presented fairly in conformity with generally accepted accounting principles.

Audit specialization responds to the role of the board when making judgments with respect to control risk
assessment and the scope planning of audit tests (Cohen, Krishnamoorthy, and Wright, 2007). The
specialized auditor know more than the non-specialized auditor about relevant industry factors which
include industry conditions such as the competitive environment, supplier and customer relationship, and
technological development. These are conditions that may give rise to specific risks of material
misstatements arising from the nature of the business or the degree of regulation. In this research,
operational risk assessment refers to the risk assessment process for financial report purposes in
identification, analysis, and management of risks relevant to preparation of financial statements that are
presented fairly in conformity with generally accepted accounting principles, including providing audit
effectiveness as related to financial statements (ODonnell and Schultz, 2005). This prior research
indicates that operational risk assessment has provided audit effectiveness as related to financial
statements. Therefore, operational risk assessment has an effect on audit value increase, audit report
143

quality and financial information usefulness. It can have consequences on audit survival because auditors
wish to survive the professional auditing. Thus, the hypothesis is proposed as follows:

Hypothesis 2: The higher the operational risk assessment is, the more likely that auditors will gain
(d) audit survival.

3.1.3 Best Audit Practice Focus
In the auditing context, best audit practices can be explained by the auditors perception of audit work to
provide an audit experience with respect and trust, commitment, ethics, continuous improvement, and
understanding of a client (Lan et al., 2008). The objective of audit practice is to create the way or
implementation technique that auditors use in audit-planning effectiveness in order to achieve the goal of
auditing. They are very important and are used in audit marketing, finance, and accounting (Ulaga and
Chacour, 2001). This research, based on the auditors expertise, knowledge, learning competency and
experience in audit tasks is to improve the standard quality itself. The standard quality is related to the
auditors physical attributes in which the auditors perception is of high quality regarding the audit task.
Consequently, the auditor is satisfied and full of self-esteem. If an auditor has positive attitudes in the
audit task, working standards are likely to increase. Therefore, the working standard leads to the clients
respect and trust in the audit task (Weis and Schank, 2000).

The best auditors have advanced the characteristics of knowledge, skill, competence, due carefulness,
ethics in decision-making (Struweg and Meintjes, 2008; McMillan, 2004), and professional skepticism
(McMillan and White, 1993). Furthermore, being an auditor requires expert knowledge and experience in
audit independence and judgment (Smith, 2005; Cohen and Kol, 2004). Competency and skills the
important tools to measure audit performance and affect audit credibility (Dorotta and others, 2006).

The expanded and extended role of best audit practices is now stretching beyond its traditional focus on
compliance and financial audit, to encompass an evaluation of the efficiency and effectiveness of
organizations, leading to achievement of their objectives. Best audit practices have become an audit
management tool for the auditor which can lead to a decision or choice among alternative good actions
(Solomon and Trotman, 2003). Auditors have implemented accurate judgment, as well as for audit
performance (Hui and Fatt, 2007). Likewise, best audit practices framework is necessary to evaluate the
efficiency of audit methodology which can improve audit execution, business process development and
control risk. Best audit practices include those related to roles, responsibilities and authorities of the audit
activities, processes, and evaluation of audit credibility.

The prior research on auditing focuses on audit areas at both the individual and firm level. The individual
level of auditing has many issues about the audit task so that the result of research needs to suggest the
effectiveness of auditor work, such as: audit quality, audit value, audit vision, audit experience and audit
learning until audit survival. In the literature reviews, audit task can be grouped into the following areas:
ability to use standard and core principles for audit work (Joshi and Porth, 2003), interpersonal
communication, the relationship between auditor and client (Hilton and Southgate, 2007; Dorotta and
others, 2006; Smith, 2005), knowledge, skill and expertise of audit techniques (Dittenhofer, 2001),
competitive environmental auditing, and stakeholder need ( Struweg and Meintijes, 2008; Jayalakshmy
and others, 2005). In this research, best audit practice focus refers to an emphasis on audit management
tools for auditors that can lead to a decision or choice among alternative good actions (Solomon and
Trotman, 2003).

Auditors have implemented accurate judgment, as well as audit performance (Hui and Fatt, 2007).
Therefore, best audit practice focus has an effect on audit value increase, audit report quality and
financial information usefulness. It can have consequences on audit survival because auditors wish to
survive within their professional auditing. Thus, the hypothesis is proposed as follows:

Hypothesis 3: The higher the best audit practice focus is, the more likely that auditors will gain
(d) audit survival.
144

3.1.4 Audit Planning Orientation
Audit planning is an activity in the financial audit process. The International Audit Standard (ISAs) section
300, Planning an Audit of Financial Statements, (2006), states that the objective of audit planning is so
that it will be performed in an effective manner. The audit planning procedures are not isolated from other
audit procedures and are held throughout the audit until the audit ends. Auditors will be updated at any
time after the audit plan to get more information from the auditing. ISAs section 300, Planning an Audit
of Financial Statements, (2006), requires that auditors create an overall audit strategy that sets the
scope, timing, direction of the inspection, and development of audit plans. Accordingly, Shoommuangpak
and Ussahawanitchakit (2009) defined audit strategy as the way or technique of auditors. Its used in
audit practice in order to achieve the goal of auditing or audit effectiveness. In prior research, Bedard et
al., (1999) regarded focus on audit planning in five types including focus, extent, audit method (nature),
timing, and staffing. According to the research, timing and staffing are a resource, and focus and extent
are the audit scope. Bedard et al., (1991) found that the audit method and audit resource depended on
inherent or control risk factors, environment, client-industries and audit experience; but audit scope had
the contrasting result and depended on judgment and information. Bedard et al., (2005) suggest that the
auditor's ability to sufficiently and appropriately determine the nature, timing, and extent of audit
evidences and allocation of audit resources are consistent with the level of audit risk assessment.

Researchers found a confused relationship between audit planning and audit procedure (Bedard et al.,
1999). Many auditors practiced audit procedures the same as those who did in previous years (Bedard,
Mock, and Wright, 1999; Hoffman and Zimbelman, 2009). They changed their audit procedure when the
important control environments were changed. This does not meet the requirements of a standard audit.
ISAs section 300, Planning an Audit of Financial Statements, (2006), requires that auditors should
consider the risk and fraud of the audit planning and develop audit planning throughout the audit process.
Auditors who did not comply with audit planning nor plan the audit planning would impact audit practice
efficiency, effectiveness, and quality of the audit report. In this research, audit planning orientation refers
to the focus and ability to create strategy for the overall auditing. The auditing development plan is for the
purpose of the auditing performance to be effective. This includes present audit planning competency
which is audit method efficiency, audit resource allocation quality, audit scope setting effectiveness, and
audit knowledge utilization, in order to provide achievement (Bedard et al., 2005). The development of the
audit task is used in all stages in the audit process. Audit planning is designed and developed through
risk assessment and audit practice or audit method. Therefore, audit planning orientation has an effect on
audit value increase, audit report quality, and financial information usefulness. It can have consequences
on audit survival because auditors wish to survive the professional auditing. Thus, the hypothesis is
proposed as follows:

Hypothesis 4: The higher the audit planning orientation is, the more likely that auditors will gain
(d) audit survival.

3.1.5 Audit Review Awareness
The objective of the review is to ensure that the audits are in accordance with generally-accepted auditing
standards, company policies, and procedures which affect the review, since the feedback and effects on
preparer behavior after the reviews have not received much attention (Miller, Fedor, and Ramsay, 2006).
The review process is shifting from a sequential to a more real-time process (Wilk, 2002). An important
function of the review process is to ensure the quality and work under the pressure of time which may
result in the reduced performance of the auditor (Agoglia, Kida, and Hanno, 2003). A review can be done
by reading the workpaper and notes for following up and improving the general review. Knowledge is the
key factor in the spreadsheet. The review process will reduce the variance of the decision. The judgment
will come from the review of the audit (Ramsay, 1994).

Audit reviewers play a critical role to improve the quality of the audit by ensuring that the conclusions
reach prevention (Tan and Shankar, 2010). The audit review process helps public accounting firms
control quality, and it also provides information for performance appraisal and timely feedback. Reviewers
must objectively assess their subordinates work for the review process to achieve the objectives (Tan
145

and Jamal, 2001). Reviewers often work with a regular group of preparers with whom reviewers become
familiar and with subordinates whose performance they must assess. This familiarity with subordinates
can improve the efficiency and effectiveness of the review process (Tan and Jamal, 2001). Auditing
standards require that auditors assess all relevant evidence in an unbiased and objective manner (Guiral,
Ruiz and Rodgers, 2011), and require auditors to consider the reliability of the evidence they use in
making judgments (Reimers and Fennema, 1999). The audit review process is an integral part of the
quality control approach in audit practice and standards (Favere-Marchesi, 2006). Audit practice tends to
become more interactive, including face-to-face discussions between the preparers and the reviewers
(Wilk, 2002). The review process is a control mechanism implemented by CPA firms to enhance the
quality of the workpaper documentation, conclusions made (Tan and Trotman, 2003), and proper
rendering of the audit judgments (Tan and Shankar, 2010). The review is a part of the quality control
mechanism in the implementation and auditing standards (Agoglia, Hatfield, and Brazel., 2009; Favere-
Marchesi, 2006; Ismail and Trotman, 1999), and as a part of quality control procedures of the financial
statement audits. This documentation is prepared by the auditors and reviewed by supervisors (Miller,
Fedor, and Ramsay, 2006).

Audit review is an important source of accountability for field auditors, and the anticipation of review
increases audit effort and improves audit performance (Payne, Ramsay, and Bamber, 2010). Audit review
is a primary means of audit quality control and auditor training (Payne, Ramsay, and Bamber, 2010). In
addition, the conduct of the audit, and external quality reviews are important tools to enhance audit quality
(Favere-Marchesi, 2000). In this research, audit review awareness refers to the audits that perform tasks
in accordance with generally accepted auditing standards, firm policies and procedures, including the
anticipation of review, increasing audit effort and improving audit performance (Miller, Fedor, and
Ramsay, 2006; Payne, Ramsay, and Bamber, 2010). Audit review plays an important role in audit work.
Therefore, audit review awareness has an effect on audit value increase, audit report quality and financial
information usefulness. It can have consequences on audit survival because auditors wish to survive the
professional auditing. Thus, the hypothesis is proposed as follows:

Hypothesis 5: The higher the audit review awareness is, the more likely that auditors will gain
(d) audit survival.

3.1.6 Audit Information Integration Concern
Audit information integration leads internal auditors to assess overall and review the work that they
evaluate. The objectives of auditing information integration are the creation of an integrated audit system
for the evaluation of management system performance including qualitative, environmental, economic,
and financial audit subsystems (Karapetrovic and Willborn, 1998). Within the integration of financial
statements and information audits, it helps internal auditors to understand the impact and significance of
the resulting control of information technology in financial statements (Chaney and Kim, 2007). To
evaluate how processes are automated and generally how applications facilitate the movement of
information in their relationships with interfacing applications, auditing integration helps internal auditors
to find the mistakes in financial statements that are caused by programming errors. Internal auditors
increase the confidence of assurance in the correction of financial statements. Lack of effective
integration may result in a failure to converge in the audit task. The result is an inadequate overall
conclusion about the process under evaluation (Chaney and Kim, 2007). Likewise, overall process
auditing more easily uncovers the ineffectiveness of processes and more easily evaluates the
performance of risk management than does the spot focus. This helps firms improve their processes and
increases the effectiveness of risk management.

Therefore, the separation of auditing for all standards leads internal auditors to have a greater workload.
The result requires a larger budget and the work is less efficient and effective. In order to improve the
efficiency and effectiveness of the internal audit task, the integrating of internal audit procedures is
necessary (Brandts, 2007; Chaney and Kim, 2007). Auditing integration is likely to produce nothing, but it
has many benefits for firms. The advantage of auditing integration is decreasing internal audit time, audit
cost and workload, more integrated compliance views, fewer risks, and increasing the quality of work
(Bradts, 2007). Consequently, it decreases the amount of similar-looking assessments and audits. The
146

efforts integrate all compliance allow documenting and testing a control only once, and uses it for many
different regulations (Brandts, 2007). In this research, auditing information integration concern refers to
linking all audit procedures together into the audit system in order to achieve the audit goals, such as
financial reliability, process quality, information technology security, and environmental protection activity
(Chaney and Kim, 2007). Therefore, audit information integration concern has an effect on audit value
increase, audit report quality, and financial information usefulness. It can have consequences on audit
survival because auditors wish to survive the professional auditing. Thus, the hypothesis is proposed as
follows:

Hypothesis 6: The higher the audit information integration concern is, the more likely that auditors
will gain greater (a) audit value increase, (b) audit report quality, (c) financial information
usefulness, and (d) audit survival.

3.2 Audit Value Increase
Audit value is the value audited and verified by the auditors. Investors and other stakeholders must trust
auditors if they are to attribute any value to the auditors reports (Power, 1999). Audit quality requires
auditors to design and apply audit procedures to detect material misstatements due to fraud. Prior
research (Pentland, 1993) describes the detection of fraud is implicit in how the audit report provides
comfort to the users. Financial users may expect some assurance that the financial statements are free of
material misstatements due to fraud and/or errors, with explicit statements to that effect in the auditors
reports (Foster, McClain and Shastri, 2009).

Value increase is defined as the resources which can be used to exploit external circumstances that are
likely to bring in organizational revenues, or the resource which can be used to counterbalance negative
external situations that are likely to keep revenue from flowing in. (Coulter, 2002). From an economic
perspective, organizations must be responsible to their stockholders who have owned resources by
making earnings as a return on their investment (Watts and Zimmerman, 1986). On the other side of
economic responsibility, making profit serves employees and the community on a large scale due to its
effect on employment and the level of national income, called social welfare. If businessmen see
business as a part of ecology, then the existence of organizations or firms become interdependent of all
groups in the ecological system.

Auditors perceive audit quality in terms of strict adherence to GAAS requirements. Auditors working with a
company reduce their business risk by minimizing auditees dissatisfaction, avoiding litigation, and limiting
the damage to their reputation, which could result from audit failure. The demise of Arthur Andersen
(2002) is an example of the ultimate results of audit failure (Al-Ajmi, 2009). In this research, audit value
increase refers to the value audited and verified by the auditors which ensures that audit procedures
detect material misstatements due to fraud, including avoiding litigation, and limiting the damage to
reputation, which could result from audit failure (Higgin and Nandram, 2009). Therefore, audit value
increase can be provided to enhance audit survival. Thus, the hypothesis is proposed as follows:

Hypothesis 7: The higher the audit value increase is, the more likely that auditors will gain greater
audit survival.

3.3 Audit Report Quality
Audit report is one of the very observable outputs available to outside stakeholders to evaluate audit
efficiency (Habib and Bhuiyan, 2010). The audit report is the final outcome of the audit process, and is the
only external communication of what the auditor has done and concluded concerning the audit (Geiger
and Raghunandan, 2002). The purpose of the audit report is to communicate the outcome of the auditors
review of the financial statements. Auditors are required to investigate the clients financial statements in
compliance with generally accepted auditing standards (GAAS) and provide an audit opinion to assure
investors that the statements are free from material misstatements (Bhattacharjee, Moreno and Yardley,
2005). The quality of financial statement audits is dependent on the job performance of auditors
(McKnight and Wright, 2011). The audit report is defined as the reliable and timely auditors opinions to
assure users that the financial statements are free from material misstatements (Garcia-Benau and Zorio,
2004).
147

The objective of audit reports is the assurance of the financial statement user (Law, 2008), and the
outcome of the auditors review of the financial statement (Lim-u-sanno and Ussahawanitchakit, 2009).
The audit report quality can enhance timeliness and reliability for investors and creditors. It helps
management maintain relationships with investors and creditors. The timeliness is an important factor of
the financial statement. The investor and creditor use the information in the financial statement as a basis
for discussion. Futhermore, DeAngelo (1981) defines the audit report as an auditor who will both discover
and truthfully report material errors, misrepresentations, or omissions in the client's material financial
statements. Garcia-Benau and Zorio (2004) assent that reliable and timely auditors' opinions assure
users that the financial statements are free from material misstatements. Bhattacharjee et al., (2005),
state that the audit opinion assures investors that the statements are free from material misstatement.
The definitions show that the audit report is the auditors opinion about material misstatements with
timeliness and reliability. The quality of the audit report provides reasonable assurance and shows a
summary in the form of opinion under recognition, measurement, and disclosures in the financial
statements on materiality.

The audit report is the final result of the auditors. Auditors must express their opinion in audit reports that
the financial the statements are correct in accordance with general principles of accounting. Much
research uses audit reports to represent audit quality (DeAngelo, 1981; Davidson and Neu, 1993). Audit
reports are a final result of auditing, and they represent audit work. The key feature of the audit report is
timeliness and reliability (Lim-u-sanno and Ussahawanitchakit, 2009). Audit report quality is related to
credibility and success. The audit success is due to acceptance by clients, client satisfaction, and
reliability of financial statements. In this research, audit report quality refers to the audit report of the
auditors review of the financial statements that consists of significance and reliability of the auditors
opinion which, in turn, assures the financial statements are free from material misstatements (Martin,
2007). The timeliness and clarity of audit reports are useful for decision-making as are the qualifications
of the auditors reservations regarding GAAP and GAAS (Al-Ajmi, 2009). This quality is good and
excellent for the interests and needs of users and other stakeholders (Habib and Bhuiyan, 2010; Martin,
2007). Audit report quality has an effect on audit survival because auditors wish to survive the
professional auditing. Therefore, audit report quality can be provided to enhance audit survival. Thus, the
hypothesis is proposed as follows:

Hypothesis 8: The higher the audit report quality is, the more likely that auditors will gain greater
audit survival.

3.4 Financial Information Usefulness
The purpose of financial information is to provide users with relevant and timely information for decision-
making, including analysis for forecasting future performance. Decision-making is concerned with future
actions (Bello, 2009) or financial information that is the basis of internal financial information. This assists
managers to make business decisions such as providing new products, making or buying a product,
product pricing, and creating a new type of product. Managerial accounting innovation literature indicates
that managerial accounting innovation implementation has a significant influence on decision-making
effectiveness.

Information usefulness is perceived by inside and outside users, which can be used to decide correctly
and in a timely manner, following the objectives of the financial report defined by professional standards
(Kieso, Weygandt, and Warfield, 2004). Krumwiede et al. (2007) indicated that it is useful to have
financial information in the context of the decision process. The financial analysis is necessary in order to
obtain the actual available data. In this research, financial information usefulness refers to the result of
good reporting which can reflect the financial position and operating results that are accurate and reliable.
Also they can be analyzed to forecast future performance (Fisher and Kingma, 2001). Therefore, financial
information usefulness can be provided to enhance audit survival. Thus, the hypothesis is proposed as
follows:

148

Hypothesis 9: The higher the financial information usefulness is, the more likely that auditors will
gain greater audit survival.

3.5 Audit Survival
The current structures of audit markets are the result of the long-term processes of auditor entry and exit.
This raises two questions: 1) Why are some auditors more successful than the others? And 2) What
makes a new auditor a likely candidate for survival? (Brocheler and others, 2004). Prior research has
indicated that there is an important reason for auditors to step forward and show how serious they are
about their own survival (Mano, 2003). High education contributes to an auditors professional
capabilities. Firms having auditors with a higher education level are expected to be more successful as an
independent audit firm and to be associated with greater longevity. Auditor-switching and the selection of
audit quality by clients show fairly systematic relationships between audit firm characteristics (brand
name) and clients futures (DeFond, 1992). As an auditor provides a professional service, human capital
can be expected to play a key role in the explanation of auditor success and failure (Brocheler and others,
2004). In this research, audit survival refers to the existence of a professional accountant who is
measured by continuing clients, creation of new clients, and providing other services which the auditors
must present fairly in the statement in accordance with GAAP (Mano, 2003).

3.6 Antecedents of Audit Intelligence
There are five antecedents: long-term audit vision, audit morality mindset, audit learning competency,
regulatory force and stakeholder pressure.

3.6.1 Long-Term Audit Vision
Vision manifests the organizational value and expectations of stakeholders (Fereira and Otley, 2009). In
the face of a changing environment, organizational vision and mission statements are symbols that guide
the process of deciding what to change and what to preserve in strategies and activities (Chenhell, 2003).
Moreover, focusing on organizational and economic factors, which is the parameter of the CEOs vision,
is the crucial catalyst for organizational survival (Tregoe and others, 1990). Long-term views provide a
platform on which the organization is built (Kober, Ng, and Paul, 2007).

Prior research shows that long-term vision is defined as a mind-set of the desired future state which is
built upon multidimensional performance concepts, including long-term financial success, long-term
growth and social commitment (Davidson, 2005). Evidence from qualitative research, (Gratton, 1996)
indicates the most important question to seven multi-national companies that can achieve long-term
organizational vision is, What are the factors which place at risk the capability to deliver long-term
corporate success? To gain successful implementation of organizational vision and strategies,
executives must be prepared to identify the actions required to bridge into the future (Gratton, 1996). In
this research, long-term audit vision refers to an auditors view of the future toward the desired audit task.
Its intention and consideration is to achieve audit survival in the long-term (Davidson, 2005). Therefore,
long-term audit vision can be effective to gain greater audit intelligence. Thus, the hypothesis is proposed
as follows:

Hypothesis 10: The higher the long-term audit vision is, the more likely that auditors will gain
greater (a) internal control evaluation, (b) operational risk assessment, (c) best audit practice
focus, (d) audit planning orientation, (e) audit review awareness, and (f) audit information
integration concern.

3.6.2 Audit Morality Mindset
Professionals play strategic roles in the development and continuing existence of major economic,
political, and cultural institutions of industrial society. Professionals identify the most feasible, desirable,
and efficient solutions to important problems posed by clients or society. The relevance of professionals
tasks to the basic needs of society, in combination with societys restricted ability to comprehend their
specialized areas of expertise, justifies the critical examination of professionals and their roles. Therefore,
a professionals role is to evaluate professional guidance and practice (Roberts and Dwyer, 1998). In the
auditing profession, auditors perform self-governance over the auditing profession through the statements
149

on auditing standards, especially by the American Institute of Certified Public Accountants (AICPA) code
of professional conduct (AICPA, 1988c).

The auditing profession defines the code of ethics as a set of rules and principles designed to rule out
undesirable activities. Other rules make explicit references to the public interest, integrity, objectivity and
independence of the membership. Karcher (1996) shows that code of professional morality is looked
upon as a step in the right direction to serve two purposes. First, it confirms to the general public that the
profession intends to protect the public interest. Second, the code provides guidance to the profession for
acceptable behavior. Such rules outline the broader context within which auditors must exercise their
activities. These sets of rules are distinctive elements of professionalism, which distinguish these
professions from other occupations (Dedoulis, 2006). The code of professional conduct establishes
principles of conduct and specific rules of conduct that cannot be violated. Particularly, the code of
morality is the comprehensive statement of values and principles guiding the daily work of auditors.

Previous studies indicate that auditors who perform auditing under the base line of professional morality,
provide audit effectiveness and audit efficiency through audit planning quality and audit operation
transparency, which have made auditors report accuracy increase audit report value. In addition, Flint
(1988) states that the code of ethics is a set of rules which are the basic principles of correct action for
members of a profession, designed to protect the institutional reputation of professionalism, such as to
promote adherence to the kind of conduct that the public requires. Moreover, Meigs and Whittington
(1989) argued that the code is a main element of professionalism which provides the members with the
guidelines for maintaining a professional attitude and conducting themselves in a manner that will
enhance the professional stature of their discipline. The code of ethics guides its members in the
performance of their professional duties, and observance of these rules is effective (Bakre, 2007). In this
research, audit morality mindset refers to the principles that are outlined for auditing professionals to
accept the obligation to serve the public interest, honor the public trust, and demonstrate commitment to
professionalism that comprises independence, integrity, objectivity, secrecy, and competency (Bakre,
2007). Therefore, audit morality mindset can be effective to gain greater audit intelligence. Thus, the

Hypothesis 11: The higher the audit morality mindset is, the more likely that auditors will gain

3.6.3 Audit Learning Competency
Audit learning leads to new and higher levels of knowledge, both in internal and external audits for
individual knowledge (Wong and Chueng, 2008). The auditor is successfully developed via training in
audit tasks, which training is also important in professions such as nursing, engineering, law, and
medicine. The auditor necessarily takes a course before taking on the profession. Furthermore, as a
competence requirement for audit professionals, auditors must finish training required by the International
Federation of Accountants (IFAC) and the International Accounting Education Standard Board (IAESB),
that regulate the guidance for auditors improvement. It is also for those under their authority in a
professional capacity who must also have appropriate training and supervision to be competent to
undertake the work they perform. Education and development for acquiring and maintaining the
capabilities of the audit professional include: (a) advanced professional education pursued at academic
institutions or through the programs of professional bodies; (b) on-the-job training and experience
programs; (c) off-the-job training; and (d) continuing professional development (CPD) courses and
activities. The IAESB recognizes that assessing capability measuring output is likely to be superior to
measuring input. Output-based approaches concentrate on measuring the development and maintenance
of competence actually achieved through learning, rather than measuring the various learning activities.
Thus, an auditor who has continued learning by training and has pursued relevant news such as
accounting and auditing standard announcements, professional regulations, and economic changes will
increase his competence.

150

Furthermore, audit skills, beliefs, schemas, and behaviors can be modified or changed for the better from
continuous professional learning, (Real, Leal and Roldan, 2006; Wong and Cheung, 2008). Audit learning
leads to new and higher levels of knowledge for both the internal audit (Wong and Chueng, 2008) and the
external audit. Furthermore, individual knowledge can be constantly renewed, widened, and improved
(Goh and Richards, 1997). Also improved extensive and updated knowledge bases help the auditor to
make a special effort to keep up with facts, trends, and developments. The audit context has less
empirical statements of the audit learning. The ongoing process of forming, storing, and retrieving
modifies mental models and schemas in a response to the audit of situations and environments (Choe,
2004). This learning is the aware or unaware process where by tacit and/or explicit knowledge is created
by a person through sensing and interpretating information (Wouters and Wilderom, 2008). In this
research, audit learning competency refers to an auditors continuous learning attitude in which a variety
of knowledge is acquired mainly through education and training in accounting and auditing programs.
These programs have pursued relevant news such as accounting and auditing standard announcement,
dynamic regulation, and economic change, including improved audit performance, communication or
interaction the external environments such as clients and others, and conservation among auditors
(Wong and Chueng, 2008). Moreover, the auditor has more knowledge to demonstrate learning ability.
Therefore, audit learning competency can be effective to gain greater audit intelligence. Thus, the

Hypothesis 12: The higher the audit learning competency is, the more likely that auditors will gain
(a) internal control evaluation, (b) operational risk assessment, (c) best audit practice focus, (d)
audit planning orientation, (e) audit review awareness, and (f) audit information integration
concern.

3.6.4 Regulatory Force
Regulations are a part of the external effect on internal audit practices (Seal, 2006). The regulations affect
direct practices which is something regulation provides as an alternative for audit practice. The
regulations are not only limited to audit standards, but are also to rule out force by governance, and to
rule the general clients operations, such as the rules of the board of investment. In Thailand, the auditor
may be under many regulations. Enforcement of each regulation is different. Each auditor is under
different regulations depending on rights and licenses. However, audit practices of auditors also have
similar standards. The regulator has their regulations which are different from those that the regulator
enforces. It lends to different competencies in audit planning.

Prior research has investigated the relationship between regulation forces and audit work (Sinchuen and
Ussahawanitchakit, 2010; Boonmunewai and Ussahawanitchakit, 2010) but it has not related it to
management audit effectiveness (Srikarsem and Ussahawanitchakit, 2010). However, the regulation
force would not have a direct effect with the audit work. In this research, regulatory force refers to rules
and regulations that effect audit practice of which some rules or/and regulations provide alternatives in
the audit task (Seal, 2006). Therefore, regulatory force can affect greater audit intelligence. Thus, the

Hypothesis 13: The higher the regulatory force is, the more likely that auditors will gain greater (a)
internal control evaluation, (b) operational risk assessment, (c) best audit practice focus, (d) audit
planning orientation, (e) audit review awareness, and (f) audit information integration concern.

3.6.5 Stakeholder Pressure
Stakeholder pressures affect audit conduct, which also relate to performance outcomes (Siegel and
Wright, 2006; Boons and Wagner, 2009). Generally, stakeholder requirements are an increasing relevant
topic for auditors involved in audit practice. The interest is inspired by the increasing recognition that
sustainability challenges of the empirical findings show that stakeholder pressures drive auditors actions
(Krajnc and Glavic, 2005; Qi and others, 2010). Wood (1991) concurs when stating that social issues and
stakeholder concerns affect auditors decision-making. Burke and Logsdon (1996) have seen the total
pressure from different stakeholder groups have positively correlated with the level of activities and
performance. Pressure from different stakeholder domains therefore has correlated with audit
performance. This is because high pressure implies that auditors have had to ensure more legitimacy in
151

their operations, thus being forced to define proactive strategies which imply higher levels of
performance.

In prior research, Sarkis and others (2010) found that stakeholder pressure impacts auditors action
consistent with social expectations. Similarly, Freeman (1984) took the position that auditors produce
externalities that affect many parties which are both internal and external. Externalities often cause the
stakeholder to increase pressure on auditors to reduce negative impacts and increase positive ones.
Thus, stakeholder engagement is important in order for auditors to establish social legitimacy. Moreover,
audit capabilities that foster cooperation and learning are a critical part of stakeholder engagement.
Responding to stakeholder pressure requires audit-learning capabilities, especially when there are
conflicting pressures derived from a variety of stakeholders (Roome and Wijen, 2006). Thus, it facilitates
that the conducted audits were associated with a wider array of stakeholder pressures in that they were
more likely to have greater perceived stakeholder influence from internal, regulatory and external
stakeholders (Darnall, Seol and Sarkis, 2009). In this research, stakeholder pressure refers to auditors
who perceive stakeholder pressures that can affect or be affected by the achievement of the audit
objective (Sarkis and others, 2010). Therefore, stakeholder pressure can be effective to gain greater audit
intelligence. Thus, the hypothesis is proposed as follows:

Hypothesis 14: The higher the stakeholder pressure is, the more likely that auditors will gain

3.7 Valuable Audit Experience
Experience is used to explain the advantage relationship between independent and dependent variables
such as the recommendation that a moderating effect of experience has an interaction with sales force
perceptions, attitudes, and behavior (Russ and McNeilly, 1995). Joshi, Kathuria and Porth (2003)
investigated experiences moderating effect on relationships between managers and manufacturing
performance. To utilize the concepts and relevant studies of audit experience, auditors have more
experience in auditing strength and audit dynamism. Auditors use analytical skills in the audit to interpret
and integrate evidence in the audit process (Kaplan, O'Donnell and Arel, 2008).
Audit experience refers to skills which are obtained from audit tasks concerning relevant audit standards
and accounting guidance, critical analysis, demonstrating professional skepticism, and error-specific
experiences (financial misstatements), which affect audit task and audit performance. Zhau and Wong
(2008) defined audit experience as auditors individually learning from successes and mistakes based on
their prior experience. Audit experience has expanded on knowledgeable judgment performance in that
auditors gain experience by developing and accumulating persuasive knowledge (Kaplan, O'Donnell and
Arel, 2008). Audit experience is used in all stages of the audit task. The auditor applies experience in
audit planning. Audit experience leads to knowledge creation and accumulation to help auditors correct a
pass (Meschi and Metais, 2006), and knowledge is a condition for the development of dynamic action.

Essentially, auditors should be dynamic in their experience in audit techniques when they gather audit
evidence from the audit process (Dixon and others, 2004). Moreover, auditing experience also includes
know-how that requires a specific action from the individual auditor to consider expertise in dynamic
judgment (Bonner and Lewis, 1990). In this research, valuable audit experience refers to the value of
audit experience as auditors develop and accumulate persuasive knowledge, including both direct and
indirect experience, as well as individually learning from successes and mistakes based on their prior
experience (Kaplan and others, 2008; Zhau and Wong, 2008). Therefore, valuable audit experience can
increase the competency of the relationship among antecedents (long-term audit vision, audit morality
mindset, audit learning competency, regulatory force and stakeholder pressure) and audit intelligence.
Thus, the hypotheses are proposed as follows:

Hypothesis 15: Valuable audit experience will result in positive relationships between the long-
term audit vision and (a) internal control evaluation, (b) operational risk assessment, (c) best audit
152

practice focus, (d) audit planning orientation, (e) audit review awareness, and (f) audit information

Hypothesis 16: Valuable audit experience will result in positive relationships between the audit
morality mindset and (a) internal control evaluation, (b) operational risk assessment, (c) best audit

Hypothesis 17: Valuable audit experience will result in positive relationships between the audit
learning competency and (a) internal control evaluation, (b) operational risk assessment, (c) best
audit practice focus, (d) audit planning orientation, (e) audit review awareness, and (f) audit
information integration concern.

Hypothesis 18: Valuable audit experience will result in positive relationships between the
regulatory force and (a) internal control evaluation, (b) operational risk assessment, (c) best audit

Hypothesis 19: Valuable audit experience will result in positive relationships between the
stakeholder pressure and (a) internal control evaluation, (b) operational risk assessment, (c) best
audit practice focus, (d) audit planning orientation, (e) audit review awareness, and (f) audit
information integration concern.

4. RESEARCH METHODS

4.1 Sample Selection and Data Collection Procedure
In this study, the sample was selected from the Revenue Department, Ministry of Finance database on
February 4, 2013 of 2,688 tax auditors (TAs) in Thailand of which 1,740 TAs were selected as the
sample. A mail survey procedure via questionnaire was used for data collection. The key informants were
tax auditors (TAs) in Thailand. With regard to the questionnaire mailing, 209 were usable. The
questionnaire was evaluated by an academic professional in terms of content validity and face validity.

In order to protect bias, the early and late respondents were tested for non-response-bias according to
Armstrong and Overton (1977). Accordingly, the test results showed no significant difference. Therefore,
there is no problem for a non-response bias.

4.2 Variables
The measure development procedures involve the multiple-item development for measuring each
construct in the conceptual model. To measure each construct in the conceptual model, all of the
variables gained from the survey are measured by a five-point Likert scale, ranging from 1 (strongly
disagree) to 5 (strongly agree).

4.2.1 Dependent Variable
Audit survival refers to the existence of professional accountants who are measured by continuing clients,
creating new clients, and providing other services which the auditors must present fairly in accordance
with GAAP.

4.2.2 Independent Variables
Internal control evaluation refers to the auditors in-depth understanding of the internal control structure
and internal control evaluation under audit practices, to be able to detect material misstatements in
clients financial statements.

Operational risk assessment refers to the risk assessment process for financial report purposes which are
identification, analysis, and management of risks relevant to the preparation of financial statements.
153

These are presented fairly in conformity with generally accepted accounting principles, including provided
audit effectiveness as related to financial statements.

Best audit practice focus refers to an emphasis on audit management tools for the auditor which can lead
to a decision or choice among alternative good actions. Auditors have implemented accurate judgment,
as well as audit performance.

Audit planning orientation refers to the focus on an ability to create strategy for the overall auditing and
auditing development plan. This is for the purpose of the auditing performance to be effective, including
present audit planning competency, which is audit method efficiency, audit resource allocation quality,
audit scope-setting effectiveness, and plus audit knowledge utilization in order to provide achievement.

Audit review awareness refers to the audits that perform tasks in accordance with generally accepted
auditing standards and firm policies and procedures, including the anticipation of reviews that increase
audit effort and improve audit performance, which audit review plays an important role in audit work.

Audit information integration concern refers to linking all the audit procedures together into the audit
system in order to achieve the audit goals, such as financial reliability, process quality, information
technology security, and environmental protection activity.

4.2.3 Mediating Variables
Audit value increase refers to the value audited and verified by the auditors which ensure that audit
procedures detect material misstatements due to fraud, including avoiding litigation and limiting the
damage to their reputation, possibly resulting from audit failure.

Audit report quality refers to the audit report of the auditors review of the financial statements that
consists of significance and reliability of the auditors opinion that assures the financial statement of
material misstatement, timeliness and clarity of audit report useful for decision-making and the
qualification of the auditors reservations regarding GAAP and GAAS as the quality which is goodness
and excellence for the interests and needs of users and other stakeholders.

Financial information usefulness refers to the result of good reporting which can reflect on the financial
position and operating results that are accurate and reliable, and can be analyzed to forecast future
performance.

4.2.4 Antecedent Variables
Long-term audit vision refers to an auditors view of the future toward the desired audit task. Its intention
and consideration is to achieve audit survival in the long term.

Audit morality mindset refers to the principles outlined for auditing professionals to accept the obligation
to serve the public interest, honor the public trust, and demonstrate commitment to professionalism that
comprises independence, integrity, objectivity, secrecy, and competency.

Audit learning competency refers to an auditors continuous learning attitude, namely, that a variety of
knowledge is acquired mainly through education and training in accounting and auditing programs. These
are pursued in relevant news such as accounting and auditing standard announcements, dynamic
regulations, and economic changes, including improvements in audit performance, communication or
interaction with the external environments (such as with clients and others), and conservation among
auditors.

Regulatory force refers to rules and regulatory effects on audit practice of which some rules and
regulations provide alternatives to the audit task.

154

Stakeholder pressure refers to auditors who perceive stakeholder pressures that can affect or be affected
by the achievement of the audit objective.

4.2.5 Moderating Variable
Valuable audit experience refers to the value of audit experience as auditors develop and accumulate
persuasive knowledge of which both direct and indirect experience includes individual learning from
successes and mistakes based on their prior experience.

4.2.6 Control Variables
As to gender, prior research suggests that sex-role stereotypes negatively influence the evaluation of
female auditors, thus reducing the upward mobility of women to partnerships in public accounting. The
result shows that the gender differences are comprised of impersonal qualities, by arguing that scarcity of
women in top management positions is due to female personality traits and behavior patterns that make
women less-suited than men for leadership roles (Hull and Umansky, 2002). Thus, this research
demonstrates that gender that has an impact on audit intelligence and audit survival. For analysis, gender
is represented by a dummy variable including 0 (male), and 1 (female).

Audit Experience. Auditor experience affects the relationships among audit intelligence, audit value, audit
report and audit survival. Prior research suggests that firms with longer auditor tenure provide more
reliable financial information (Ghosh and Moon, 2005). Auditor tenure is measured by a dummy variable
including 0 (less than or equal to 10 years), and 1 (more than 10 years).

4.3 Methods
Here, factor analysis was implemented to assess the underlying relationships of a large number of items
and to determine whether they can be reduced to a smaller set of factors. The factor analysis was
conducted separately on each set of the items, representing a particular scale due to limited
observations. This analysis has a high potential to inflate the component loadings. Thus, a higher rule-of-
thumb, a cut-off value of 0.40, was adopted (Nunnally and Bernstein, 1994). All factor loadings are
greater than the 0.40 cut-off and are statistically significant. The reliability of the measurements was
evaluated by Cronbachs alpha coefficients. In the scale reliability, Cronbachs alpha coefficients are
greater than 0.70 (Nunnally and Bernstein, 1994). The scales of all measures appear to produce
internally consistent results; thus, these measures are deemed appropriate for further analysis because
they express an accepted validity and reliability in this study. Table 1 presents the results for both factor
loadings and Cronbachs alpha for multiple-item scales used in this study.

The ordinary least squares (OLS) regression analysis is used to test and examine the hypothesized
relationships between audit intelligence, audit value increase, audit report quality, financial information
usefulness, audit survival, long-term audit vision, audit morality mindset, audit learning competency,
regulatory force, stakeholder pressure, and valuable audit experience of tax auditors (TAs) in Thailand.
Thus, the aforementioned variables play significant roles in explaining the research relationships.
Because the dependent variable, independent variables, and the control variables in this study were
neither nominal data nor categorical data, OLS is an appropriate method for examining the hypothesized
relationships (Aulakh, Kotabe and Teegen, 2000). With the interest of understanding the relationships in
this study, the research model of these relationships is depicted as follows.

Equation 1: AVI =
01
+
1
ICE +
2
ORA +
3
BAP +
4
APO +
5
ARA +
6
AII+
7
GEN +
8
EXP +
1
Equation 2: ARQ =
02
+
9
ICE +
10
ORA +
11
BAP +
12
APO +
13
ARA +
14
AII +
15
GEN +
16
EXP +
2

Equation 3: FIU =
03
+
17
ICE +
18
ORA +
19
BAP +
20
APO +
21
ARA +
22
AII +
23
GEN +
24
EXP +
3
Equation 4: AUS =
04
+
25
ICE +
26
ORA +
27
BAP +
28
APO +
29
ARA +
30
AII +
31
AVI +
32
ARQ +
33
FIU +
34
GEN +
35
EXP +
4

Equation 5: ICE =
05
+
36
LAV +
37
AMM +
38
ALC +
39
REF +
40
STP+
41
GEN +
42
EXP +
5

155

Equation 6: ICE =
06
+
43
LAV +
44
AMM +
45
ALC +
46
REF +
47
STP +
48
VAE
+
49
(LAV*VAE) +
50
(AMM*VAE) +
51
(ALC*VAE) +
52
(REF*VAE) +
53
(STP*VAE) +
54
GEN +
55
EXP +
6

Equation 7: ORA =
07
+
56
LAV +
57
AMM +
58
ALC +
59
REF +
60
STP +
61
GEN +
62
EXP +
7

Equation 8: ORA =
08
+
63
LAV +
64
AMM +
65
ALC +
66
REF +
67
STP +
68
VAE
+
69
(LAV*VAE) +
70
(AMM*VAE) +
71
(ALC*VAE) +
72
(REF*VAE) +
73
(STP*VAE) +
74
GEN +
75
EXP +
8

Equation 9: BAP =
09
+
76
LAV +
77
AMM +
78
ALC +
79
REF +
80
STP +
81
GEN +
82
EXP +
9

Equation 10: BAP =
10
+
83
LAV +
84
AMM +
85
ALC +
86
REF +
87
STP +
88
VAE
+
89
(LAV*VAE)+
90
(AMM*VAE) +
91
(ALC*VAE)+
92
(REF*VAE)
+
93
(STP*VAE) +
94
GEN +
95
EXP +
10

Equation 11: APO =
11
+
96
LAV +
97
AMM +
98
ALC +
99
REF +
100
STP +
101
GEN +
102
EXP
+
11

Equation 12: APO =
12
+
103
LAV +
104
AMM +
105
ALC +
106
REF +
107
STP +
108
VAE
+
109
(LAV*VAE) +
110
(AMM*VAE) +
111
(ALC*VAE) +
112
(REF*VAE)
+
113
(STP*VAE) +
114
GEN +
115
EXP +
12

Equation 13: ARA =
13
+
116
LAV +
117
AMM +
118
ALC +
119
REF +
120
STP +
121
GEN +
122
EXP +
13

Equation 14: ARA =
14
+
123
LAV +
124
AMM +
125
ALC +
126
REF +
127
STP +
128
VAE
+
129
(LAV*VAE) +
130
(AMM*VAE) +
131
(ALC*VAE) +
132
(REF*VAE)
+
133
(STP*VAE) +
134
GEN +
135
EXP +
14

Equation 15: AII =
15
+
136
LAV +
137
AMM +
138
ALC +
139
REF +
140
STP +
141
GEN +
142
EXP +
15

Equation 16: AII =
16
+
143
LAV +
144
AMM +
145
ALC +
146
REF +
147
STP +
148
VAE +
149
(LAV*VAE) +
150
(AMM*VAE) +
151
(ALC*VAE) +
152
(REF*VAE) +
153
(STP*VAE) +
154
GEN +
155
EXP +
16

TABLE 1
RESULTS OF MEASURE VALIDATION

Items Factor Loadings Cronbachs Alpha
Internal Control Evaluation (ICE) 0.69-0.99 0.92
Operational Risk Assessment (ORA) 0.72-0.95 0.88
Best Audit Practice Focus (BAP) 0.81-0.90 0.89
Audit Planning Orientation (APO) 0.73-0.90 0.89
Audit Review Awareness (ARA) 0.71-0.95 0.88
Audit Information Integration Concern (AII) 0.79-0.86 0.87
Audit Value Increase (AVI) 0.78-0.89 0.87
Audit Report Quality (ARQ) 0.83-0.91 0.92
Financial Information Usefulness (FIU) 0.82-0.87 0.81
Audit Survival (AUS) 0.84-0.88 0.81
Long-Term Audit Vision (LAV) 0.84-0.91 0.90
Audit Morality Mindset (AMM) 0.79-0.91 0.92
Audit Learning Competency (ALC) 0.74-0.88 0.84
Regulatory Force (REF) 0.83-0.95 0.92
Stakeholder Pressure (STP) 0.79-0.87 0.85
Valuable Audit Experience (VAE) 0.83-0.89 0.88

156

5. RESULTS AND DISCUSSION

Table 2 presents the descriptive statistics and correlation matrix for all variables. With respect to potential
problems relating to multicollinearity, Variance Inflation Factors (VIFs) were used to provide information
on the extent to which non-orthogonality among independent variables inflates standard errors. The VIFs
range from 1.01 to 8.40, well below the cut-off value of 10 recommended by Neter, Wasserman and
Kutner (1985), meaning that the independent variables are not correlated with each other. Therefore,
there are no substantial multicollinearity problems encountered in this study.

Table 3 shows the results of OLS regression analysis of the relationships between audit intelligence, audit
value increase, audit report quality, financial information usefulness, and audit survival. Audit intelligence
includes internal control evaluation, operational risk assessment, best audit practice focus, audit planning
orientation, audit review awareness and audit information integration concern. The results are based on
four equations. The results affect the six dimensions of audit intelligence on audit value increase, audit
report quality, financial information usefulness, and audit survival.

Internal control evaluation is significantly positively related to audit value increase (b
1
= 0.11, p < 0.1).
Thus, Hypothesis 1a is supported, but Hypotheses 1b, 1c, and 1d are not supported. Operational
risk assessment is not related to audit value increase, audit report quality, financial information
usefulness, and audit survival. Thus, Hypotheses 2a, 2b, 2c, and 2d are not supported. Best audit
practice focus is significantly positively related to audit value increase (b
3
= 0.26, p < 0.01), audit report
quality (b
11
= 0.32, p < 0.01), and financial information usefulness (b
19
= 0.30, p < 0.01). Thus,
Hypotheses 3a, 3b, and 3c are supported, and 3d is not supported. Audit planning orientation is
significantly positively related to audit survival (b
28
= 0.30, p < 0.05).

TABLE 2
DESCRIPTIVE STATISTICS AND CORRELATION MATRIX

Variables ICE ORA BAP APO ARA AII AVI ARQ FIU AUS LAV AMM ALC REF STP VAE GEN EXP
Mean 4.00 4.17 4.17 4.20 4.24 4.10 4.08 4.15 4.08 4.07 4.27 4.32 4.24 4.09 4.01 4.28
S.D. 0.63 0.55 0.52 0.53 0.55 0.56 0.61 0.58 0.60 0.65 0.57 0.56 0.53 0.60 0.58 0.54
ICE
ORA .61***
BAP .64*** .67***
APO .66*** .59*** .75***
ARA .59*** .57*** .71*** .90***
AII .60*** .60*** .80*** .77*** .72***
AVI .58*** .54*** .70*** .71*** .73*** .66***
ARQ .52*** .56*** .71*** .70*** .74*** .65*** .82***
FIU .52*** .51*** .68*** .66*** .70*** .65*** .80*** .92***
AUS .46*** .44*** .58*** .68*** .69*** .53*** .71*** .70*** .68***
LAV .50*** .58*** .66*** .70*** .71*** .61*** .71*** .73*** .70*** .66***
AMM .45*** .51*** .71*** .68*** .69*** .66*** .71*** .73*** .71*** .69*** .79***
ALC .43*** .42*** .58*** .62*** .64*** .53*** .61*** .61*** .56*** .58*** .70*** .69***
REF .43*** .47*** .53*** .55*** .56*** .48*** .56*** .61*** .61*** .56*** .59*** .62*** .65***
STP .50*** .53*** .62*** .67*** .70*** .59*** .69*** .70*** .67*** .61*** .70*** .68*** .66*** .67***
VAE .53*** .52*** .66*** .71*** .72*** .66*** .69*** .70*** .68*** .65*** .72*** .71*** .68*** .59*** .70***
GEN -.05 -.08 -.06 -.07 -.05 -.10 -.07 -.11 -.11 -.04 -.11 -.07 -.03 .03 -.03 -.18***
EXP .10 .04 -.01 .07 .04 .08 .05 -.01 .02 -.02 .02 -.03 -.04 -.04 .02 .08 -.08

***
p<0.01,
**
p<0.05,
*
p<0.10

Thus, Hypothesis 4d is supported, but Hypotheses 4a, 4b, and 4c are not supported. Audit review
awareness is significantly positively related to audit value increase (b
5
= 0.43, p < 0.01), audit report
quality (b
13
= 0.51, p < 0.01), and financial information usefulness (b
21
= 0.49, p < 0.01). Thus,
Hypotheses 5a, 5b, and 5c are supported, but Hypothesis 5d is not supported. Audit information
157

integration concern is significantly positively related to financial information usefulness (b
22
= 0.14, p <
0.1). Thus, Hypothesis 6c is supported, but Hypotheses 6a, 6b, and 6d are not supported.

Audit value increase is significantly positively related to audit survival (b
31
= 0.22, p < 0.01). Thus,
Hypothesis 7 is supported. Audit report quality is not related to audit survival. Thus, Hypothesis 8 is
not supported. Financial information usefulness is significantly positively related to audit survival (b
33
=
0.19, p < 0.1). Thus, Hypothesis 9 is supported.

Table 4 presents the results of the affect of five antecedences of audit intelligence that consist of long-
term audit vision, audit morality mindset, audit learning competency, regulatory force, and stakeholder
pressure. The results indicated that long-term audit vision is significantly positively related to internal
control evaluation (b
36
= 0.23, p < 0.05), operational risk assessment (b
56
= 0.40, p < 0.01), best audit
practice focus (b
76
= 0.16, p < 0.1), audit planning orientation (b
96
= 0.24, p < 0.01), and audit review
awareness (b
116
= 0.26, p < 0.01). Thus, Hypotheses 10a, 10b, 10c, 10d, and 10e are supported, but
Hypothesis 10f is not supported. Audit morality mindset is significantly positively related to best audit
practice focus (b
77
= 0.41, p < 0.01), audit planning orientation (b
97
= 0.22, p < 0.01), audit review
awareness (b
117
= 0.20, p < 0.01), and audit information integration concern (b
137
= 0.40, p < 0.01). Thus,
Hypotheses 11c, 11d, 11e, and 11f are supported, but Hypotheses 11a and 11b are not supported.

TABLE 3
RESULTS OF OLS REGRESSION ANALYSIS
a

Independent Dependent Variables
Variables AVI ARQ
FIU AUS
ICE 0.11
*
0.01 0.06 -0.03
(0.06) (0.06) (0.07) (0.07)
ORA 0.02 0.07 -0.01 -0.02
(0.06) (0.06) (0.07) (0.07)
BAP 0.26
***
0.32
***
0.30
***
0.02
(0.09) (0.08) (0.10) (0.09)
APO -0.01 -0.08 -0.14 0.30
**
(0.12) (0.12) (0.12) (0.12)
ARA 0.43
***
0.51
***
0.49
***
0.12
(0.11) (0.10) (0.11) (0.12)
AII 0.06 0.04 0.14
*
-0.13
(0.08) (0.08) (0.09) (0.09)
AVI 0.28
***
(0.09)
ARQ 0.12
(0.13)
FIU 0.19
*
(0.12)
GEN -0.03 -0.14 -0.12 0.04
(0.09) (0.09) (0.10) (0.09)
EXP

0.05 -0.07 -0.02 -0.10
(0.09) (0.09) (0.10) (0.10)
Adjusted R
2
0.60 0.61 0.56 0.58
***
p<0.01,
**
p<0.05,
*
p<0.10,
a
Beta coefficients with standard errors in parenthesis.

158

TABLE 4
RESULTS OF OLS REGRESSION ANALYSIS
a

Independent Dependent Variables
Variables ICE ICE ORA ORA BAP BAP APO APO ARA ARA AII AII
LAV 0.23
**
0.20
**
0.40
***
0.38
***
0.16
*
0.12
*
0.24
***
0.19
**
0.26
***
0.21
***
0.11 0.09
(0.11) (0.11) (0.10) (0.11) (0.09) (0.09) (0.08) (0.08) (0.08) (0.08) (0.09) (0.09)
AMM 0.04 -0.01 0.06 0.05 0.41
***
0.38
***
0.22
***
0.14
*
0.20
***
0.13
*
0.40
***
0.34
***
(0.11) (0.11) (0.10) (0.10) (0.08) (0.09) (0.08) (0.08) (0.08) (0.08) (0.09) (0.09)
ALC 0.04 -0.02 -0.13 -0.14 0.05 0.00 0.12
*
0.05 0.12
*
0.06 0.05 -0.04
(0.09) (0.10) (0.09) (0.09) (0.08) (0.08) (0.07) (0.07) (0.07) (0.07) (0.08) (0.08)
REF 0.11 0.09 0.17
**
0.14
*
0.03 0.02 0.03 0.04 0.02 0.01 0.01 -0.01
(0.09) (0.09) (0.08) (0.08) (0.70) (0.70) (0.07) (0.07) (0.07) (0.07) (0.08) (0.07)
STP 0.22
**
0.14
*
0.17
**
0.14
*
0.16
**
0.10 0.24
***
0.17
**
0.28
***
0.21
***
0.20
***
0.12
(0.10) (0.10) (0.09) (0.09) (0.08) (0.08) (0.07) (0.08) (0.07) (0.07) (0.08) (0.08)
VAE 0.26
***
0.13 0.23
***
0.29
***
0.27
***
0.30
***
(0.10) (0.10) (0.08) (0.08) (0.07) (0.08)
LAV*VAE 0.06 -0.03 -0.02 0.07 -0.01 0.15*
(0.11) (0.11) (0.09) (0.08) (0.08) (0.09)
AMM*VAE 0.01 -0.01 0.09 -0.06 -0.03 -0.06
(0.12) (0.12) (0.10) (0.09) (0.09) (0.10)
ALC*VAE -0.08 0.08 -0.06 -0.06 -0.08 -0.06
(0.09) (0.09) (0.07) (0.07) (0.07) (0.08)
REF*VAE 0.06 -0.02 0.08 0.04 0.02 0.13

(0.09) (0.09) (0.08) (0.07) (0.07) (0.08)
STP*VAE 0.01 0.03 -0.05 -0.04 0.04 -0.07
(0.10) (0.10) (0.08) (0.08) (0.07) (0.08)
GEN -0.04 0.01 -0.08 -0.05 -0.02 0.02 -0.03 0.06 0.01 0.09 -0.09 -0.03
(0.12) (0.13) (0.12) (0.12) (0.10) (0.10) (0.10) (0.10) (0.09) (0.09) (0.11) (0.11)
EXP 0.20 0.14 0.07 0.06 -0.01 -0.04 0.14 0.08 0.08 0.03 0.16 0.10
(0.12) (0.12) (0.12) (0.12) (0.10) (0.10) (0.10) (0.09) (0.09) (0.09) (0.11) (0.10)
Adjusted R
2
0.29 0.30 0.36 0.36 0.54 0.55 0.57 0.59 0.60 0.62 0.47 0.51

***
p<0.01,
**
p<0.05,
*
p<0.10,
a
Beta coefficients with standard errors in parenthesis.
Audit learning competency is significantly positively related to audit planning orientation (b
98
= 0.12, p <
0.1) and audit review awareness (b
118
= 0.12, p < 0.1).

Thus, Hypotheses 12d and 12e are supported, but Hypotheses 12a, 12b, 12c, and 12f are not
supported. Regulatory force is significantly positively related to operational risk assessment (b
59
= 0.17,
p < 0.05).

Thus, Hypothesis 13b is supported, but Hypotheses 13a, 13c, 13d, 13e, and 13f are not supported.
Stakeholder pressure is significantly positively related to internal control evaluation (b
40
= 0.22, p < 0.05),
operational risk assessment (b
60
= 0.17, p < 0.05), best audit practice focus (b
80
= 0.16, p < 0.05), audit
planning orientation (b
100
= 0.24, p < 0.01), audit review awareness (b
120
= 0.28, p < 0.01), and audit
information integration concern (b
140
= 0.20, p < 0.01).

Thus, Hypotheses 14a, 14b, 14c, 14d, 14e, and 14f are supported.

Moreover, all interaction among valuable audit experience and five antecedents are predicted that have
positive influence on all six dimensions of audit intelligence. That finding indicated the interaction between
valuable audit experience significantly positively moderates the relationships between long-term audit
vision and audit information integration concern (b
149
= 0.15, p < 0.1).

Thus, Hypothesis 15f is supported but other hypotheses are not supported.

6. CONTRIBUTIONS FOR FUTURE RESEARCH

6.1 Theoretical Implication
This study provides a clear understanding the relationships between audit intelligence and audit survival
of TAs in Thailand via audit value increase, audit report quality, and financial information usefulness.
159

Furthermore, this study determines long-term audit vision, audit morality mindset, audit learning
competency, regulatory force, and stakeholder pressure as the antecedents of audit intelligence.

The moderating variable as valuable audit experience has effects on the relationship between the
antecedents and audit intelligence. This study provides two theoretical implications expanding on prior
knowledge and literatures of audit intelligence.

For advancing the field theoretically, this study is one of the first known studies to link audit intelligence to
audit value increase, audit report quality, financial information usefulness, and audit survival, including the
moderators of valuable audit experience of TAs in Thailand.

6.2 Managerial Implications

TAs will profoundly understand, and thus effectively manage and utilize audit intelligence to enhance
audit value increase, audit report quality, and financial information usefulness which can lead to audit
survival.

Furthermore, to maximize benefits of audit intelligence, TAs who required desirable achievement will gain
long-term audit vision, audit morality mindset, audit learning competency, regulatory force, and
stakeholder pressure to support their work and maintain audit survival.

Future research may study other variables to extend the relationships between audit intelligence, audit
value increase, audit report quality, and financial information usefulness that affect audit survival.

This study makes three contributions to the literature of audit intelligence. Firstly, this research provides
new dimensions to measure audit intelligence of auditors; namely, internal control evaluation, operational
risk assessment, best audit practice focus, audit planning orientation, audit review awareness and audit
information integration concern, including advances in the literature, by categorizing many antecedents
and consequences of audit intelligence and developing a model to test the relationships.

Secondly, this research examines the relationships between audit intelligence and audit survival via audit
value increase, audit report quality and financial information usefulness under the moderating effects of
valuable audit experience.

Lastly, this research provides an important contribution to the theories. There are two main theories used
to explain the relationship among the variables in this research, including the theory of successful
intelligence and the contingency theory. Thus, these variables are considered in the purposes and
research questions of this research.

7. CONCLUSION

This study examines audit intelligence that influences audit value increase, audit report quality, and
financial information usefulness, which provide audit survival for TAs in Thailand. The results also present
long-term audit vision, audit morality mindset, audit learning competency, regulatory force, and
stakeholder pressure which are the antecedents of audit intelligence.

Audit value increase and financial information usefulness also have a positive influence on audit survival.
Valuable audit experience does not positively moderate the relationships among long-term audit vision,
audit morality mindset, audit learning competency, regulatory force, and stakeholder pressure and audit
intelligence, and the relationships between audit intelligence and audit survival.

Finally, the advantages of audit intelligence will reach to long-term audit vision, audit morality mindset,
audit learning competency, regulatory force, and stakeholder pressure to support the auditors work and
enhance audit survival.

160

REFERENCES:

Aaker, D. A., Kumar, V. and Day, G. S. 2001. Marketing Research. New York: John Wiley and Sons.

Abbott, L. J., and Parker, S. 2000. Audit Selection and Audit Committee Characteristics. Auditing: A
Journal of Practice and Theory, 19(2): 47-66.

Agoglia, C. P., Kida, T. and Hanno, D. M. 2003. The Effect of Alternative Justification Memos on the
Judgments of Audit Reviewees and Reviewers. Journal of Accounting Research, 41: 33-46.

__________, Hatfield, R. C. and Brazel, J. F. 2009. The Effects of Audit Review Format on Review Team
Judgments. Auditing: A Journal of Practice and Theory, 28: 95-111.

Al-Ajmi, J. 2009. Audit Firm, Corporate Governance and Audit Quality: Evidence From Bahrain. Advances
in Accounting, Incorporating Advances in International Accounting, 25: 64-74,

Anderson, S. W. and Lanen, W. N. 1999. Economic Transition, Strategy and the Evolution of
Management Accounting Practices: The Case of India. Accounting, Organizations and Society, 24: 379-
412.

Armstrong, J. S. and Overton, T. S. 1977. Estimating Nonrespons Bias in Mail Surveys. Journal of
Marketing Research, 14: 396-402.

Ashbaugh-Skaife, H. and others. 2008. The Effect of Internal Control Deficiencies and Their Remediation
on Accrual Quality. The Accounting Review, 83(1): 217-50.

Ashton, A. 1991. Experience and error frequency knowledge as potential determinants of audit expertise.
The Accounting Review, 66 (2): 218239.

Bakre, O.M. 2007. The Unethical Practices of Accountants and Auditors and the Compromising Stance
of Professional Bodies in the Corporate World: Evidence from Corporate Nigeria. Accounting
Forum, 31: 277-303.

Bedard, J. 1989. Expertise in Auditing: Myth or Reality. Accounting Organizations and Society, 14 (1&2):
113-131.

________ . 1991. Expertise and Its Relation to Audit Decision Quality. Contemporary Accounting
Research, 8(1): 198-222.

________. and Chi, M. 1993. Expertise in Auditing. Auditing : A Journal of Practice and Theory, 21-45.

________. and Wright, Arnold M. 1994. The Functionality of Decision Heuristics: Reliance on Prior Audit
Adjustment in Evidential Planning. Behavioral Research in Accounting, 6: 62-89.

________., Theodore Mock, and Arnold Wright. 1999. Evidential planning in auditing: A review of the
empirical research. Journal of Accounting Literature, 18: 96-142.

Bedard, J.,Graham, L., and Jackson, C. 2005. Information Systems Risk and Audit Planning. International
Journal of Auditing, 9: 147.

Bhattacharjee, S., Moreno, K. and Yardley, J. 2005. Auditors as Underwriters: An Alternative Framework.
International Journal of Auditing, 9: 1-19.

Bonner, S. and Lewis, B. 1990. Determinants of Auditor Expertise. Journal of Accounting Research, 28 :
1-20.

161

Brandts, Luc. 2007. Integrated Compliance: The Challenge of Convergence. Internal Auditing, 22(3) : 25.

Brocheler, V., Maijoor, S., and Witteloostuijn, A. 2004. Auditor human capital and audit firm survival.
Accounting, Organizations and Society, 29: 627-646.

Cadez, S. and Guilding, C. 2008. An Exploratory Investigation of an Integrated Contingency model of
Strategic Management Accounting. Accounting, Organizations and Society, 33: 836-863.

Chaney, Christine and Kim Gene. 2007. The Integrated Auditor. The Internal Auditor, 64(4) : 46.

Chang, S. and others. 2008. The Development of Audit Detection Risk Assessment System : Using the
Fuzzy Theory and Audit Risk Model. Expert Systems with Applications, 35 : 1053-1067.

Choe, J. 2004. The Relationships Among Management Accounting Information, Organizational Learning
and Production Performance. Journal of Strategic Information Systems, 13: 61-85.

Cohen, A. and Kol, Y. 2004. Professionalism and Organizational Citizenship Behavior: An Empirical
Examination among Israeli Nurses. Journal of Managerial Psychology, 19(4) : 386-405.

Coulter, M.,K. 2002. Strategic Management in Action. 2nd ed. Prentice Hall, New Jersey, The United
States of America.

Curtis, B. M. and Payne, E. A. 2008. An Examination of Contextual Factors and Individual Characteristics
Affecting Technology Implementation Decision in Auditing. International Journal of Accounting
Information System, 9(2): 104-121.

Davidson, Ronald A., and Dean Neu. 1993. A note of the association between audit firm size and audit.
Contemporary Accounting Research, 9; 479.

DeAngelo, L. 1981. Auditor Size and Audit Quality. Journal of Accounting &Economics, 3: 183.

Dedoulis, E. 2006. The Code of Ethics and the Development of the Auditing Profession in Greece, The
Period 1992-2002. Accounting Forum, 30: 155-178.

Dittenhofer, M. 2001. Internal Auditing Effectiveness : An Expansion of Present Methods. Managerial
Auditing Journal, 16(8): 443-450.

Dorotta, I. and others. 2006. Teaching and Evaluating Professionalism for Anesthesiology Residents.
Journal of Clinical Anesthesia, 18(2): 148-160.

Elliott, R. 2002. Twenty-First Century Assurance. Auditing: A Journal of Practice &Theory, 3: 139-146.

Engel, E., Hayes, R. and Wang, X. 2007. The Sarbanes-Oxley Act and Firms Going-Private Decisions.
Journal of Accounting and Economics, 44: 116-145.

Ettredge, M., Li, C. and Sun, L. 2006. The Impact of SOX Section 404 Internal Control Quality
Assessment on Audit Delay In the SOX Era. Auditing: A Journal of Practice and Theory, 25: 1-23.

Favere-Marchesi, M. 2000. Audit Quality in ASEAN. The International Journal of Accounting, 35(1): 121-
149.

______ . 2006. Audit Review: The Impact of Discussion Timing and Familiarity. Behavioral Research in
Accounting, 28: 53-64.

Flint, D. 1988.Philosophy and Principles of Auditing. London: Macmillan.

162

Foster, B.P., McClain, G. and Shastri, T. 2009. A Note on Perceptions of Auditors Internal Control Report
Mandated by the PCAOB: Can Reformatting the Report Enhance Perceived Value Added?.
Research in Accounting Regulation, 21: 63-67.

Garcia-Benau, Maria A. and Zorio, Ana. 2004. Audit Reports on Financial Statements Prepared
According to IASB Standards: Empirical Evidence from the European Union. International Journal
of Auditing, 8: 237-252.

Gendron, Y., Cooper, D.J., and Townley, B. 2007. The construction of auditing expertise in measuring
government performance. Accounting, Organizations and Society, 32: 101-129.

Geiger, Marshall A. and Raghunandan, K. 2002. Auditor Tenure and Audit Reporting Failures. A Journal
of Practice and Theory, 21(1): 67-78.

Goh, S. C. and Richards, G. 1997. Benchmarking the Learning Capacity of Organizations. Journal of
European Management, 15(5): 575-583.

Govindarajan, V. 1984. Appropriateness of Accounting Data in Performance Evaluation: An Empirical
Examination of Environmental Uncertainty as an Intervening Variable. Accounting, Organizations
and Society, 9(2): 125-136.

Guiral, Andres., Ruiz, Emiliano. and Rodgers, Waymond. 2011. To What Extent are Auditors Attitudes
toward the Evidence Influenced by the Self-Fulfilling Prophecy? Auditing: A Journal of Practice and
Theory, 30(1): 173-190.

Habib, A. and B.U. Bhuiyan. 2010. Audit Firm Industry Specialization and the Audit Report Lag. Journal
of International Accounting, Auditing and Taxation, 133-146,

Hilton, S. and Southgate, L. 2007. Professionalism in Medical Education. Teaching and Teacher
Education, 23(3): 265-279.

Hoffman, V., and Zimbelman, M. 2009. Do Strategic Reasoning and Brainstorming Help Auditors
Change Their Standard Audit Procedures in Response to Fraud Risk?. The Accounting Review, 84: 811.

Hopwood, W., McKeown, J.C. and Mutchler, J. F. 1989. A Test of the Incremental Explanatory Power of
Opinions Qualified for Consistency and Uncertainty. The Accounting Review, 64(1): 28-48.

Hui, L. T. and Fatt, Q. K. 2007. Strategic Organizational Conditions for Risks Reduction and Earnings
Management : A Combined Strategy and Auditing Paradigm. Accounting Forum, 31: 179-201.

Ismail, Zubaidah. and Trotman, K. T. 1999. Audit Review Effectiveness in an Analytical Review Task.
International Journal of Auditing, 3: 21-28.

Jeppesen K.K. 1998. Reinventing auditing, Redefining Consulting and Independence. The European
Accounting Review, 7(3): 517-539.

Jermias, J. and Gani, L. 2004. Integrating Business Strategy, Organizational Configurations and
Management Accounting System with Business unit Effectiveness: a fitness landscape approach.
Management Accounting Research, 15(2): 179-200.

Joshi , M., Kathuria, R. and Porth, S. J. 2003. Alignment of Strategic Priorities and Performance: An
Integration of operations and Strategic management Perspectives. Journal of Operations
management, 21(3) : 353-369.

Karapetrovic, Stanislav and Walter Willborn. 1998. Integrated Audit of Management Systems. The
International Journal of Quality & Reliability Management, 15(7): 694.
163

Karcher, J. N. 1996. Auditors Ability to Discern the Presence of Ethical Problems. Journal of Business
Ethics. 15(10): 1033-1050.

Kend M. 2002. Specialisation in the market for audit and related services: supply and demand side
characteristics at industry and client levels, PhD Thesis, University of Melbourne.

Koletar, J. W. 2006. Intelligence Gathering and the Future of Internal Audit. CPA Journal, 76 (4): 16-17.

Krishnan, J. 2005. Audit Committee Quality and Internal Control: An Empirical Analysis. The Accounting
Review, 80(2): 649-75.

Krumwiede, K. R., Suessmair, A. and MacDonald, J. 2007. An Exploratory Study of the Factors Affecting
the Implementation Success of German Cost Accounting Methods.
http://papers.ssrn.com/sol3/papers.cfm?abstract id=1003833.

Lan, G. and others. 2008. A Study of Relationship between Personal Values and Moral Reasoning of
Undergraduate Business Students. Journal of Business Ethics, 78(12): 121-139.

Li, H., Pincus, M. and Rego, S. 2008. Market reaction to Events Surrounding the Sabanes-Oxley Act of
2002 and Earnings Management. Journal of Law and Economics, 51: 111-134.

Lim-u-sanno, Kulwadee and Ussahawanitchakit, Phapurke. 2009. Audit risk judgment and performance of
Thai auditors: An empirical investigation of their antecedents and consequences. Journal of
Academy of Business and Economic, 9: 59-82.

Lopes, P.T. and Rodrigues, L. L. 2007. Accounting for Financial Instruments : An Analysis of the
Determinants of Disclosure in the Portuguese Stock Exchange. The International Journal of Accounting.
42(1): 25-56.

Mano, R. M. 2003. Accounting profession, heal thyself: A matter of survival. The CPA Accounting, 35(1):
121-149.

Martin, R.D. 2007. Through the Ethics Looking Glass: Another View of the World of Auditors and Ethics.
Journal of Business Ethics, 70: 5-14.

McKnight, C. A. and William F. 2011. Wright Characteristics of Relatively High-Performance Auditors.
Auditing: A Journal of Practice &Theory, 30( 1): 191206.

McMillan, J.J. and White, R.A. 1993. Auditors' Belief Revisions and Evidence Search: The Effect of
Hypothesis Frame, Confirmation Bias, and Professional Skepticism. The Accounting Review, 68(3):
443-465.

McMillan, P. Keith. 2004. Trust and the Virtues: A Solution to the Accounting Scandals?. Critical
Perspectives on Accounting, 15(6-7): 943-953.

Meigs, W.B. and Whittington, R.O. 1989. Principles of Auditing. Irvin.

Miller, C. L., Fedor, D. B., and Ramsay, R. J. 2006. Effects of Discussion of Audit Reviews on Auditors
Motivation and Performance. Behavioral Research in Accounting, 18: 135-146.

Nelson, M. 2009. A Model and Literature Review of Professional Skepticism in Auditing. Auditing: A
Journal of Practice and Theory, 28(2): 1-34.

Newman, D.P., Patterson, E.R., and Smith, J.R. 2005. The Role of Auditing in Investor Protection. The
Accounting Review, 80(1): 289-313.
164

Nicolaou, I. A. 2000. A Contingency Model of Perceived Effectiveness in Accounting Information
Systems: Organizational Coordination and Control Effects. International Journal of Accounting
Information Systems, 1(2) : 91-105.

Nunnally, J.C., and Bernstein, I. H. 1994. Psychometric Theory. New York: McGraw- Hill.

ODonnell, E. and Schultz, J.2005. The Halo Effect in Business Risk Audits: Can Strategy Risk
Assessment Bias Auditor Judgment About Accounting Details?. The Accounting Review, 80(3):
921-933.

Payne, E. A., Ramsay, R. J. and Bamber, E. M. 2010. The Effect of Alternative Types of Review on
Auditors Procedures and Performance. A Journal of Practice and Theory, 29: 207-220.

Peecher, M., Schwartz, R. and Solomon, I. 2007. Its all about quality: Perspectives on strategic-systems
auditing. Accounting Organization and Society, 32(4-5): 463-486.

Pentland, B.T. 1993. Getting Comfortable with the Numbers: Auditing and the Micro-Production of Macro-
Order. Accounting, Organizations and Society, 18: 605-620.

Power, M. 1999. The Audit Society: Rituals of Verification. Oxford: Oxford University.

Ramsay, R. J. 1994. Senior/Manager Differences in Audit Workpaper Review Performance. Journal of
Accounting Research, 32: 127-135.

Real, J. C., Leal, A.and Roldn, J. L. 2006. Information technology as a determinant of organizational
learning and technological distinctive competencies. Industrial Marketing Management, 35(4): 505-
521.

Reimers, J. L. and Fennema, M. G. 1999. The Audit Review Process and Sensitivity to Information
Source Objectivity. Auditing: A Journal of Practice and Theory, 18(1): 117-123.

Roberts, R.W. and Dwyer, P.D. 1998. An Analysis of Materiality and Reasonable Assurance: Professional
Mystification and Paternalism in Auditing. Journal of Business Ethics. 17(5): 569-578.

Shoommuangpak, Pornitp and Phapurke Ussahawanitchakit. 2009. Audit strategy of CPAs in Thailand:
Audit effectiveness and Stakeholder acceptance. International Journal of Business Strategy, 9;
136-258,

Smith, G. L. 2005. Medical Professionalism and Generation Gap. The American Journal of Medicine,
118(4): 439-442.

Solomon, I. and Trotman, K.T. 2003. Experimental Judgment and Decision Research in Auditing: The
First 25 Years of AOS. Accounting, Organizations and Society, 28: 395-412.

Stemler and others. 2009. Using the theory of successful intelligence as a framework for developing
assessment in AP physics. Contemporary Educational Psychology, 34: 195-209.

Sternberg R. J. 2005. The Theory of Successful Intelligent. Interamerican Journal of Psychology, 3: 189-
202.

Struweg, L. N., and Meintjes, C. 2008. The Professionalism Debate in South African Public Relations.
Public Relations Review, 34(3): 224-229.

Tan, H.T., and Libby, R. 1997. Tacit Managerial versus Technical Knowledge as Determinants of Audit
Expertise in the Field. Journal of Accounting Research, 35: 97-113.
165

_______. and Jamal, K. 2001. Do Auditors Objectively Evaluate Their Subordinates Work?. The
Accounting Review, 76: 99-110.

_______. and Shankar, Premila Gowri. 2010. Audit Reviewers Evaluation of Subordinates Work Quality.
Auditing: A Journal of Practice and Theory, 29(1): 251-266.

_______. and Trotman, K. T. 2003. Reviewers Responses to Anticipated Stylization Attempts by
Preparers of Audit Workpapers. The Accounting Review, 78(2): 581-604.

Tillema, S. 2005. Towards an Integrated Contingency Framework for MAS Sophistication: Case
Studies on the Scope of Accounting Instruments in Dutch Power and Gas Companies.
Management Accounting Research, 16(1): 101-129.

Ulaga, W. and Chacour, S. 2001. Measuring Customer Perceived Value in Business Markets. Industrial
Marketing Management, 30: 525-540.

Watts, R. L. and Zimmerman, J. L. 1983. Agency Problems, Auditing, and The Theory of the Firm: Some
Evidence. Journal of Law & Economics, 26(3): 613-633.

_______. 1986. Positive Accounting Theory. Englewood Cliffs, NJ: Prentice Hall.

Weber, R. 1980. Some Characteristics of the Free Recall of Computer Controls by EDP Auditors. Journal
of Accounting Research, 18 (1):214-241.

Weis, D. and Schank, M. J. 2000. Instrument to Measure Professional Nursing Values. Journal of
Nursing Scholarship, 32(2): 201- 204.

Wilk, T. J. 2002. Predecisional Distortion of Evidence as a Consequence of Real-Time Audit Review. The
Accounting Review, 7: 51-71.

Wilks, T. and Zimbelman, M. 2004. Decomposition of Fraud Risk Detection Assessments and Auditors
Sensitivity to Fraud Cues. Contemporary Accounting Research, 21(3): 719-746.

Wong, P. S. P. and Cheung, S. O. 2008. An analysis of relationship between learning behavior and
performance improvement of contracting organizations. International Journal of project
management. 26(2): 112-123.

Wouters, M. and Wilderom, C. 2008. Developing Performance-Measurement Systems as Enabling
Formalization: A Longitudinal Field Study of a Logistics Department. Accounting, Organizations
and Society, 33: 488-516.

Yamane, T. 1973. Statistics and Introductory Analysis. New York: Haper International Edition, 26(3): 613
633.

Yang, W., Moyes, G.D., Din, H.F.M., and Omar, N.H. 2010. Demographic factors that influence Malaysian
Auditors' perspective of the fraud-detecting effectiveness of red flag. Journal of business and
accounting, 3(1): 81-109.

Zhou, L., and Wong, A. 2008. Exploring the influence of product conspicuousness and social compliance
on purchasing motives of young Chinese consumers for foreign brands. Journal of Consumer
Behavior, 7(6); 470-483.

166

AUTHOR PROFILES:

Sudarat Pongsatitpat earned her M.B.A. from University of the Thai Chamber of Commerce, Thailand in
2001. Currently, she is a Ph.D. (Candidate) in Accounting at Mahasarakham Business School,
Mahasarakham University, Thailand.

Dr. Phapruke Ussahawanitchakit earned his Ph.D. from Washington State University, USA in 2002.
Currently, he is an associate professor of accounting and Dean of Mahasarakham Business School,
Mahasarakham University, Thailand.

Dr. Kesinee Muenthaisong earned her Ph.D. from Tokyo University of Agriculture and Technology,
Japan in 2006.Currently, she is a lecturer of business economics and a Director of Academic Services of
Mahasarakham Business School, Mahasarakham University, Thailand.

Audit Intelligence and Audit Survival An Empirical Research of Tax Auditor

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Audit Intelligence and Audit Survival An Empirical Research of Tax Auditor

Uploaded by

Copyright:

Available Formats

137

AUDIT INTELLIGENCE AND AUDIT SURVIVAL:

You might also like