A Qualitative Exploration of Heuristics and Cognitive Biases in Auditor Judgements

Abstract

Professional judgement is inherent in financial statement audits because various methods, techniques, or approaches prescribed in auditing standards do not provide auditors with detailed guidance or specific audit criteria. While auditors are expected to exercise their judgements based on careful reasoning, there is a possibility that they do not always follow such an approach and instead make their judgements using heuristics. This study aims to penetrate and reveal whether there are cognitive biases in the judgements of auditors and what heuristics lead to these biases. This study employs a qualitative research design and uses ethnomethodology as a research approach. Data were collected using in-depth semi-structured interviews with 15 auditors who were either partners, managers, seniors, or juniors at a public accounting firm. Using the heuristic-bias framework as a theoretical lens and based on an analysis involving data condensation, data display, and conclusion drawing and verification, this study identifies five types of biases that auditors can experience: jumping to conclusions, groupthink, representativeness, availability, and anchoring biases. The results of this study present practical implications for auditors, accounting professional associations, public accounting firms, and academic institutions. That is, the findings provide insights for formulating strategies aimed at raising auditors’ awareness about possible systematic errors, or biases, in professional judgements when auditors rely on heuristics as a simplifying judgement-making strategy.

Digitalización en la auditoría externa-desafíos para la educación y la formación profesional en México

“…Para poder evaluar esto, el auditor o auditor interno debe tener un conocimiento básico de los algoritmos, heurísticas y modelos estadísticos utilizados (Henrizi, Himmlesbach, & Hunziker, 2021). Por lo tanto, los conceptos de capacitación en las áreas de auditoría debe incluir al menos los conceptos básicos de TI y estadísticas formales (Maradona, 2020). Otra razón de la falta de clases y seminarios de TI surge del perfil de requisitos del mercado laboral para los jóvenes profesionales en auditoría externa y auditoría interna.…”