The mediated effect of SAS No. 99 and Sarbanes–Oxley officer certification on jurors’ evaluation of auditor liability

This study experimentally examines the impact of implementing Statement on Auditing Standard (SAS) No. 99, Consideration of Fraud in a Financial Statement Audit and the financial statement and internal control certification requirement by key corporate officers under the Sarbanes–Oxley Act (SOX). The study investigates the prediction that the new regulations affect jurors’ assessment of guilt for failing to discover fraud, and also whether the regulations affect jurors’ perceptions of the appropriateness of auditors’ actions regarding fraud detection and of auditors’ and officers’ responsibility for the fraudulent financial statements. The study tests whether these perceptions mediate the association between the regulations and mock jurors’ guilt assessments. Results show that jurors assess auditors as less guilty under SAS No. 99 and in the presence of the officer certification requirement. SAS No. 99 decreases guilt assessments indirectly through jurors’ perception that auditors acted more appropriately under the new standard. Although jurors did view auditors as more responsible under SAS No. 99, their responsibility perceptions had no effect on guilt assessments. An additional finding is that the officer certification requirement has an indirect effect on guilt assessments via jurors’ perceptions of the officers’ responsibility for the fraudulent financial statements.