An Analysis of Decision Biases Among Auditors in Financial Auditing

This research report delves into the critical issue of decision biases among auditors, analyzing their impact on the auditing process and financial reporting. The study begins with an introduction that highlights the importance of objective auditing and the potential for biases to influence judgments. It then presents practical motivations, emphasizing the need for accurate auditing in maintaining the integrity of financial statements. Theoretical motivations are also explored, underscoring the contribution of the research to the understanding of accounting practices. A thorough literature review examines various types of biases, such as accessibility, anchoring, overconfidence, confirmation, and rush-to-judgment biases, and their effects on auditors’ decisions. The report also presents a hypothesis regarding the impact of decision biases on financial and accounting reporting. The appendix includes a detailed breakdown of the research, summarizing key contributions from various sources. This comprehensive analysis aims to enhance the understanding of how biases can affect auditing practices and decision-making processes in accounting.

qwertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfgh
jklzxcvbnmqwertyuiopasdfghjklzxcvb
nmqwertyuiopasdfghjklzxcvbnmqwer
tyuiopasdfghjklzxcvbnmqwertyuiopas
dfghjklzxcvbnmqwertyuiopasdfghjklzx
cvbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyuio
pasdfghjklzxcvbnmqwertyuiopasdfghj
klzxcvbnmqwertyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwerty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmrty
uiopasdfghjklzxcvbnmqwertyuiopasdf
ghjklzxcvbnmqwertyuiopasdfghjklzxc
RESEARCH

Contents
Introduction......................................................................................................................................2
Practical Motivation.........................................................................................................................2
Theoretical Motivation....................................................................................................................2
Literature Review............................................................................................................................3
Hypothesis.......................................................................................................................................5
References........................................................................................................................................6
Appendix..........................................................................................................................................7

Introduction
In this particular research, the analysis regarding the decision biases among the auditors, which
entails a significant position to undertake the process of auditing techniques applied within an
organization are thoroughly reflected which propound an improper audit of different financial
statements generated in each year by organization. It is important to control the adjustments
through which the deliverance can significantly affirm their decision among the auditors that are
highly engaged in the auditing procedure of a firm. This particular issue of accounting, which
entails the decision biases among the auditors lead to an effective judgement of auditing
principles and treatment upon the financial statements. Thus, a research will be implied through
identifying a research question that generates what are the causes of decision biases among the
auditors of a firm in order to make a proper audit reporting in a specified year.
Practical Motivation
In accordance with the accounting policies there exists different issues which has directly
influenced the auditing techniques of a firm. It is important in believing the fact that for
maintenance a holistic preview of accounting balance, auditing is highly necessary. The auditing
techniques will lead to accompany the objectives that will gather the impact and estimation of
correct accounting balance occurred within the firm. It is important to understand about the facts
that eh present scenario has empowered about the ideas that will formulate the accounting
process successfully. Therefore, it is important to posses’ important decision so that the
accompanied structure of making a proper audit can be made directly. Making proper appropriate
decision for maintaining the auditing purposes are highly required by the firm (Glynn, 2017). It
will be helpful to control the objective that can settle the important consequences by which the
organization has to encounter the feasibility by which the assumptions are undertaken through
possessing the optimistic behaviours in regulating the aptitude that will facilitate the movement
in making decision.
Theoretical Motivation
The research will be highly empowered with the aspects of controlling the perspectives of the
business dealings through which the accounting issues will be highly directed. In this

circumstances the positivity among identifying the circumstances are needed to controlled in
accordance with the characteristics that will generate the conditions of attaining the policies of
better understanding the will highly maintain the favourable position in decision making process.
Literature Review
The accessibility predisposition happens when people's choices are unduly affected by data that
is most significant or effortlessly available. This happens when bookkeepers are affected by the
most effectively recovered information as they create theories for account variances, look for
data, assess proof, and survey dangers. For instance, while theorizing the reason for account
changes, directors may promptly review the kinds of occasions they have by and by experienced
yet will have a harder time creating new thoughts. According to Trotman, (2015), the reviewers
might be enticed to effectively consider the clarification given by administration; however, it
might be all the more trying for them to produce extra potential outcomes. In like manner, charge
experts may shape judgments in regards to the faultlessness of expense positions in light of the
simplicity with which they review comparative cases, without completely thinking about the
result of the cases. This propensity may likewise inclination experts' estimates and financial
specialists' prescient profit judgments. Curiously, the accessibility predisposition can likewise
add to individuals from a group feeling just as they have accomplished more work than others
have since people regularly locate their own commitments more open and noteworthy than those
of their partners do. This perception can have essential ramifications for bookkeepers filling in as
a feature of a group (Voinov, 2017).
According to Bauer, (2015), while assessing an esteem, people regularly stay on a starter sum
and after that make changes in accordance with touch base at their last gauge; notwithstanding,
they frequently make lacking judgments to land at the genuine esteem. For bookkeepers, this sort
of predisposition may happen amid the planning procedure, when settling on capital distribution
choices, or when directing a cost-fluctuation investigation. It might likewise influence diagnostic
audit systems and test evaluations. Inspectors are especially powerless against this inclination
since they commonly start their procedure with administration gave monetary judgement.
The pomposity predisposition happens when people overestimate their capacities to perform
assignments or settle on precise choices. Bookkeepers may overestimate their capacity to get

ready and review reasonable esteem gauges, survey hazards in big business asset arranging
frameworks, and assess the exactness of their execution and additionally the execution of others.
Portentousness can likewise show in different routes, for example, going up against an excessive
number of tasks, overpromising on due dates, considering only one probability when critical
thinking, truncating or skipping data ventures, and making snap judgments.
According to Guiral, (2015), the objectives of affirming are the propensity for leaders to look for
or decipher proof in manners that help previous convictions or desires. Bookkeepers may display
this propensity while assessing the quality of inner controls, choosing bookkeeping guidelines, or
evaluating the likelihood of effectively guarding an expense position in court. As a general rule,
for a person to know something is valid, he or she should test to perceive how it might be false.
On the off chance that bookkeepers need to build their expert wariness, it is essential for them to
change their mentalities to look for or translate proof in manners that disconfirm earlier
convictions or desires.
According to Griffin, (2014), the decision biases happen when chiefs frame a judgment without
completely thinking about every single accessible datum. This may happen if an administration
group achieves an early agreement without pondering on an issue, or if reviewers depend
intensely on the apparent dependability of a customer while assessing the probability of
misrepresentation. The hurry to-fathom propensity might be exacerbated by outer elements, for
example, time and budgetary weights, and might coincidentally lead chiefs to fall into different
predispositions, for example, those recorded previously (Arens, 2012).
The five basic judgment predispositions outlined in this article can show over any of the five
stages in the judgment procedure. According to Hurley, (2018), for alleviating the inclination in
judgments, consideration of each progression of the structure and keep up a familiarity with the
potential predispositions and a state of mind of expert distrust. Proficient suspicion, which is
characterized in AU Area 316, Thought of Misrepresentation in a Budgetary Proclamation
Review, as a disposition that incorporates a scrutinizing mind and a basic appraisal of review
proof, is implanted in inspecting models; however, it is additionally basic for assessing
information utilized in the choices of supervisors, bookkeepers, and duty experts.

To upgrade your choices, the disposition of expert suspicion ought to be coordinated at your very
own judgments also. Frequently you can enhance your choices by "considering the inverse" or
clarifying why your underlying evaluation could be off base. This activity constrains you to take
the time and mental exertion to think about the constraints of your picked arrangement. For basic
choices, it might be useful to get an outside gathering to get a really free evaluation.
Expanded accentuation on the utilization of judgment in bookkeeping settles on a top notch basic
leadership process basic to the accomplishment of the calling. By perusing this article and
finishing the basic leadership test, you have ventured out enhancing your choices by building up
a familiarity with the inclinations that may influence your basic leadership process. For extra
direction, see the materials recorded in the assets box.
Hypothesis
The hypothesis for this particular chosen is directed towards assessing the factors that has judged
about decision biases between the auditors. It has enhanced the potential judgement about how
the auditing consequences will be implied with the variations that have been directed below:
H0: The decision biases will generate improper financial and accounting reporting by the auditor
of a firm.
H1: The decision biases will not portray improper financial and accounting reporting by the
auditor of a firm.

References
Trotman, K. T., Bauer, T. D., & Humphreys, K. A. (2015). Group judgment and decision making
in auditing: Past and future research. Accounting, Organizations and Society, 47, 56-72.
Guiral, A., Rodgers, W., Ruiz, E., & Gonzalo-Angulo, J. A. (2015). Can expertise mitigate
auditors’ unintentional biases?. Journal of International Accounting, Auditing and Taxation, 24,
105-117.
Griffin, J. B. (2014). The effects of uncertainty and disclosure on auditors' fair value materiality
decisions. Journal of Accounting Research, 52(5), 1165-1193.
Hurley, P. J., Mayhew, B. W., & Obermire, K. M. (2018). Realigning Auditors' Accountability:
Experimental Evidence. The Accounting Review.
Bowlin, K. O., Hobson, J. L., & Piercey, M. D. (2015). The effects of auditor rotation,
professional skepticism, and interactions with managers on audit quality. The Accounting
Review, 90(4), 1363-1393.
Griffith, E. E., Hammersley, J. S., Kadous, K., & Young, D. (2015). Auditor mindsets and audits
of complex estimates. Journal of Accounting Research, 53(1), 49-77.
Glynn, P. D., Voinov, A. A., Shapiro, C. D., & White, P. A. (2017). From data to decisions:
Processing information, biases, and beliefs for improved management of natural resources and
environments. Earth's Future, 5(4), 356-378.
Arens, A. A., Elder, R. J., & Mark, B. (2012). Auditing and assurance services: an integrated
approach. Boston: Prentice Hall.
Hoefer, R. L., & Green Jr, S. E. (2016). A rhetorical model of institutional decision making: The
role of rhetoric in the formation and change of legitimacy judgments. Academy of Management
Review, 41(1), 130-150.

Appendix
Author/
s
Date Title Journal Type of
Paper
(Theoretical
or
Empirical)
If empirical,
dependent
&
independent
variables
Summary of contributionto
the research question (100
words)
Trotma
n, K.
T.,
Bauer,
T. D.,
&
Humph
reys, K.
A.
201
5
Group
judgment and
decision
making in
auditing: Past
and future
research
Accoun
ting,
Organiz
ations
and
Society
Theoretical The
variables
are
generally
the auditors
and other
stakeholders
The research will provide
the ideas of revealing
how the judgemental
decision will endeavour
the techniques of
auditing and principles.

Guiral,
A.,
Rodger
s, W.,
Ruiz,
E., &
Gonzal
o-
Angulo,
J. A.
201
5
Can expertise
mitigate
auditors’
unintentional
biases?
Journal
of
Internat
ional
Accoun
ting,
Auditin
g and
Taxatio
n
Emperical The
dependant
variables
are the
auditors
along with
the other
stakeholders
There always exists
unintentional causes of
biasness and it can be
easily eradicated by
improvising different
ideas sustained within the
firm.
Griffin,
J. B.
201
4
The effects of
uncertainty
and
disclosure on
auditors' fair
value
materiality
decisions
The
Accoun
ting
Review
Emperical The
dependant
variables
are the
auditors
along with
the other
managers.
The effects sustained
through assessing the
decision of uncertainty
will be applied for
determining the progress
effectively for a firm.
Therefore, it will be
helpful to consider these
approaches of making
decision completely
based on the results.

Hurley,
P. J.,
Mayhe
w, B.
W., &
Obermi
re, K.
M.
201
8
Realigning
Auditors'
Accountabilit
y:
Experimental
Evidence
The
Accoun
ting
review
Theoritical The
auditors are
considered
as
dependant
variable
along with
accounting
managers
and the
different
stakeholders
Maintaining proper
accountability are
required within the firm
Therefore essential
decision making process
are highly required.
Bowlin,
K. O.,
Hobson
, J. L.,
&
Piercey,
M. D.
201
5
The effects of
auditor
rotation,
professional
skepticism,
and
interactions
with
managers on
audit quality
The
account
ing
Review
Emperical The
dependent
variables
are
accounting
managers
and the
independent
variables
are auditor.
The policies of rotation
will generate the ideas of
capitalizing the essential
requirements formulated
upon the consequences
that will effectively
support the accounting
structure.