Debiasing the curse of knowledge in audit judgment

Article Abstract:

The 'curse of knowledge' in audit judgment refers to the inability of some auditors to ignore information already processed or knowledge that others do not possess. This phenomenon can be observed in going concern evaluation and analytical review. Two experiments are conducted to test the robustness of the curse of knowledge in these two audit settings with both auditors and MBA students. The studies also seek to determine how this phenomenon is affected by accountability, experience and explicit counterexplanation, that is, providing an explanation for the non-occurrence of a particular outcome. Findings reveal that the curse of knowledge is prevalent among the study participants and that its impact is not diminished by accountability. However, a third experiment demonstrates that the curse of knowledge is eliminated by counterexplanation.

Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services

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A perspective on cognitive research in accounting

Article Abstract:

Judgment and risk are the primary elements of cognitive research in auditing (CRA), research into the correlation between human cognitive processes and auditing. After making an audit investigation, auditors must express opinions that are at least partly subjective, no matter how thorough the audit examination. The potential for an erroneous opinion introduces the incidence of risk. Studies of audit judgment make great use of standards, which are applied to observable outputs, and metaphors, which model the underlying, unobservable processes of judgment. No metaphor is complete, and CRA uses different metaphors for different aspects of auditing judgment. The use of different metaphors results in tradeoffs by researchers in what their studies will reveal about the process of audit judgment.

Cognition

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Auditors' evaluation of test-of-control strength

Article Abstract:

One of the major activities undertaken by auditors is the evaluation of the strength of the audit evidence. Two factors affecting auditors' perceptions of the strength of audit evidence, the strength dimensions, which focus on the underlying constructs of the audit evidence, and the accounting firms' auditing policies, were researched. The effect of the underlying constructs of evidence and the auditors' accounting firms' auditing polices on the auditors' perceptions of audit evidence strength was researched by focusing on the evaluations of test-of-control (TC) strength. In the experiment, auditors evaluated five TCs using three strength dimensions. Research results indicate that auditors' judgments are influenced by professional standards.

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