Implications of seemingly irrelevant evidence in audit judgment

Article Abstract:

Audit judgments can be influenced by nondiagnostic evidence, though it is a priori irrelevant. A certain situation may have both diagnostic and nondiagnostic evidence. Judgment research is usually centered on the association between the evidence's relevance and predictive power. However studies show that evidence lacking predictive use also influence judgment and need to be considered too. Auditors who follow certain heuristics in the treatment of evidence are prone to error which may lead to conclusions separate from normative or statistical principles as a dilution effect will influence audit decisions. This effect may proceed from nondiagnostic evidence to implications of diagnostic evidence and can lead to misuse or lack of substantial information.

Practice

---

The effect of a bidding restriction on the audit services market

Article Abstract:

Issues concerning the relationship between service bidding and auditor performance are examined, focusing on the effect of a statute that requires nonprice competition. Topics include market structure; effect of audit fees; and conclusions that municipalities under the statute paid high auditing fees, used large audit firms with excellent reputations, and that the statute created a market of highly qualified auditors.

Standards, Market share, Accounting firms, Accounting services, Accountants, Letting of contracts, Competitive bidding

---

Misstatement direction, litigation risk, and planned audit investment

Article Abstract:

Research finds that auditors tend to unintentionally understate company performance when litigation risk is higher, business risk is higher, and expected auditing income is lower, and overstate in the opposite conditions.

Economic aspects

Similar abstracts:

• Abstracts: Implications of proposed segment reporting standards for financial analysts' investment judgments. Motivations for a change in disclosure frequency and its consequences: an examination of voluntary quarterly segment disclosures

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.