Facilitating Brainstorming: Impact of Task Representation on Auditors' Identification of Potential Frauds

Individual auditor brainstorming is an important input to group brainstorming. In a setting where multiple potential frauds exist, we examine the effect of brainstorming task representation (simultaneous versus sequential unpacking of potential frauds) on individual auditors' identification of potential frauds and fraud risk assessments. Results from an experiment with experienced auditors show that the sequential unpacking of the brainstorming task into risk categories (potential frauds identified for each category individually) leads to a greater quantity and quality of potential frauds identified by auditors compared to the simultaneous unpacking (potential frauds identified for the categories together). Additional analysis suggests that the positive effect of sequential unpacking on the quality of frauds identified persists when auditors subsequently receive frauds identified by other team members. We also find a potential negative effect of sequential unpacking as it reduces auditors' fraud risk assessments thus potentially reducing the level of professional skepticism.