a. The issue being addressed in the paper: “Risk-Based Auditing, Strategic Prompts, and Auditor Sensitivity to the Strategic Risk of Fraud” written by Kendall Bowlin explains how auditors do not anticipate the strategic risk that arises when client managers anticipate auditors’ risk based resource allocations. The conventional auditing approach suggests that more (fewer) audit resources should be focused on higher (lower)-risk accounts.
However, according to the paper’s author this idea is causing that low-risk accounts can actually have a higher risk of fraud associated. It is happing because in some occasions management anticipates this audit strategy and focus its audit resources on high risk accounts. At the end, the purpose of this paper is expose the potential threat which is being caused with the traditional risk assessment procedures.

b. The paper shows, with a laboratory experiment, how auditors behave according to the conventional risk-based auditing approach (It means, auditors allocate more resources on accounts deemed to be riskier and fewer resources on accounts that seem less risky) and the consequences that it bring.
The experiment consist in a group of students who interact in a multi-account audit setting, which reflects the essential strategic tension that exists between real-world auditors and managers. In this experiment, some student participants assuming the role of auditors and the others student participants assume the role of financial reporting managers.
The results in this experiment indicate that participants in the auditor role fail to appreciate the strategic nature of the multi-account audit game and, therefore, allocate fewer of their available resources to accounts with relatively low non-strategic risk. In the opposite case, participants in the manager role exploit this behavior by overriding this low-risk account more