Culture And Risk Assessment: A Comparison Of Singapore And Taiwan

Abstract

This study examines two areas of auditing: namely, the identification of those factors that are associated with audit risk, business risk, and personal risk; and secondly how culture affects risk assessment. A factor analysis and a logistic regression are used to analyze questionnaire data collected from Singapore and Taiwan. The results show that three factors (the effectiveness of control activities, reporting bias of management and reliability of management) are strongly associated with the auditor’s risk assessment. This result replicates findings of previous research, indicating the importance of understand the client’s control environment in the assessment of the likelihood of material misstatements. In addition, this study also hypothesized that differences in the cultural values of Chinese auditors are likely to result in differences in the risks assessed. The results show that auditors place more emphasis on their firms’ risk rather than their personal risk. However, compared to auditors in Taiwan, auditors in Singapore seem to be more concerned with risks at the individual level than at the group level. It implies the impact of Western Anglo-Saxon ideas on individuals from a Chinese background.