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Auditors' Judgments (auditor + judgment)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

The Impact of Competing Goals, Experience, and Litigation Consciousness on Auditors' Judgments

INTERNATIONAL JOURNAL OF AUDITING, Issue 3 2009
Stephen K. Asare
This study uses an experiment to examine the interactive effect of goals and experience on auditors' inventory write-off assessments and the role of litigation consciousness in mediating this effect. We find that when presented with a competing compliance and client relations goal, more experienced auditors were more likely to recommend an inventory write-off than less experienced auditors. However, when presented with only a compliance goal, auditors were equally likely to recommend an inventory write-off. The finding that less experienced auditors are more influenced by client relations goals suggests that the early socialization into the profession may be dominated by client relations concerns rather than litigation concerns. Mediation results suggest that auditors' litigation consciousness is a significant mechanism which helps drive the interactive effect of goals and experience on auditors' inventory write-off assessments. Implications for research, practice, and regulation are discussed. [source]

Order effects and recency: where do we go from here?

ACCOUNTING & FINANCE, Issue 2 2000
Ken Trotman
Previous studies of auditor judgments have examined whether the order in which information is received affects their judgments. In particular, these studies have considered whether there is a recency effect which occurs when the disconfirmatory/confirmatory evidence treatment results in a final judgment which is significantly higher than the confirmatory/disconfirmatory treatment. More recent studies have investigated the circumstances when recency effects exist and when they are mitigated. The results of the studies are mixed. After the addition of two further studies (Arnold et al., 2000; Monroe and Ng, 2000) in this edition of the journal, the results are still mixed. The paper outlines the possible explanations for the mixed results across studies and some issues that need to be addressed prior to collection of further empirical evidence. [source]

An examination of order effects in auditors' inherent risk assessments

ACCOUNTING & FINANCE, Issue 2 2000
Gary Monroe
While recency effects have been reported in a variety of audit tasks, recent studies suggest that these effects may be mitigated under certain conditions. The importance of investigating order effects in auditors' judgments rests with its potential to impact on the efficiency and effectiveness of audits. Since current studies suggest that recency effects may not impact on all audit situations, it is necessary to identify conditions or variables in the task environment that either induce or mitigate recency. This study examines the occurrence of order effects in auditors' inherent risk assessments, a task not previously examined. Using a case study administered to 70 auditors, this study found that auditors' judgments were not influenced by the order in which audit evidence was evaluated. Rather, the results suggest that judgments of inherent risk may be biased towards conservatism. This may not be surprising given the negative consequences associated with failing to adequately plan an audit. This may cause auditors to act cautiously and thus mitigate recency effects. [source]

The New Role of the Internal Auditor: Implications for Internal Auditor Objectivity

INTERNATIONAL JOURNAL OF AUDITING, Issue 2 2000
Richard G. Brody
The role of the internal auditor continues to evolve. The recent emphasis on consulting activities has brought new questions and concerns regarding the ability of internal auditors to function in an independent and objective manner. The purpose of this research is to explore whether internal auditors view their consulting role as one in which they are to provide objective feedback to management or one in which they are to provide solutions that they believe are in the best interests of their company. Specifically, we examine whether the internal auditors' judgments are dependent on their company's role (buyer or seller) in an acquisition. Results revealed that the role of the company in the negotiation process did influence judgments. This suggests that internal auditors are likely to assume the position that is in the best interests of their employer. Implications of these results are discussed as are suggested areas for future research. [source]

Eliminating recency with self-review: the case of auditors' ,going concern' judgments

JOURNAL OF BEHAVIORAL DECISION MAKING, Issue 3 2002
Robert H. Ashton
Abstract This paper examines the use of self-review to debias recency. Recency is found in the ,going concern' judgments of staff auditors, but is successfully eliminated by the auditor's use of a simple self-review technique that would be extremely easy to implement in audit practice. Auditors who self-review are also less inclined to make audit report choices that are inconsistent with their going concern judgments. These results are important because the judgments of staff auditors often determine the type and extent of documentation in audit workpapers and serve as preliminary inputs for senior auditors' judgments and choices. If staff auditors' judgments are affected by recency, the impact of this bias may be impounded in the ultimate judgments and choices of senior auditors. Since biased judgments can expose auditors to significant costs involving extended audit procedures, legal liability and diminished reputation, simple debiasing techniques that reduce this exposure are valuable. The paper also explores some future research needs and other important issues concerning judgment debiasing in applied professional settings. Copyright © 2002 John Wiley & Sons, Ltd. [source]