What does this research mean for the field?

Without mechanisms to validate auditor independence from management, auditors are incentivized to either collude with managers against owners or engage in subgame domination by taking actions contrary to the owner's interests. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

What question did this study set out to answer?

The aim is to explore the off-equilibrium behaviors of auditors and the implications of their independence from management.

June 15, 2026

Discussion of The Auditor's Off-Equilibrium Behaviors.

Key Points

The aim is to explore the off-equilibrium behaviors of auditors and the implications of their independence from management.
Discussed various models including statistical sampling and game-theoretic frameworks.
Analyzed the impact of potential collusion between auditors and management.
Explored necessary validations for maintaining auditor independence.
Established that lack of auditor independence can lead to collusion or contrary actions to the owner's interests.
Identified the importance of a thinking opponent in the audit process as per the game-theoretic model.

Abstract

Abstract The article presents a discussion of the auditor's off-equilibrium behaviors. Statistical sampling models, decision aids, and expert systems models are examples of the game-theoric model. Fellingham and Newman 1985 point out that the population is really generated by a thinking opponent & the client. The basic conclusion of the paper is that some means of validating the auditor's independence (from management) is necessary, otherwise the auditor will be tempted either to collude with the manager against the owner or, if collusion is ruled out, to take actions which the owner does not want— the problem of subgame domination.

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Cite This Study

William R. Scott (Sun,) studied this question.

synapsesocial.com/papers/6a2f980ca1cfeec490829166 https://doi.org/https://doi.org/10.2308/ajpt-15116742

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