The Invisible Fraud: The Impact of Inattentional Blindness on Auditor Fraud Detection

Evidence from major fraud investigations has revealed that auditors often fail to attend to visual fraud cues (i.e., red flags) within substantive testing evidence. Research in psychology on inattentional blindness (IB) provides a theoretical framework to explain why this occurs. Although most forensic research has focused on audit planning, we focus on the detection of visual fraud cues embedded in substantive testing evidence. We examine the impact of two interventions, priming and strategic reasoning, on senior audit associates to determine the extent to which these interventions mitigate IB effects. The results indicate that IB effects hinder auditor visual fraud cue detection during the performance of substantive testing procedures and that priming significantly reduced IB effects. The findings provide important implications for practice by drawing the auditor's attention to these effects and by suggesting priming as an efficient and cost-effective intervention to assist in mitigating IB effects in the auditing environment.