Why Good Accountants do Bad Audits

44 views1 pages
19 Mar 2011
School
Course
Why Good Accountants do Bad Audits
- The real problem isnt conscious corruption. Its unconscious bias
The Roots of Bias
- Our desires powerfully influence the way we interpret information, even when were
trying to be objective and impartial
- Armed with the same information, different people reach different conclusions ± ones
that favour their own interests
Accounting for Bad Accounting
- Bias thrives wherever there is the possibility of interpreting information in different ways
- Once people equate their own interest with another partys, they interpret data to favour
that party. Attachment breeds bias
- Self-serving biases, become even stronger when people are endorsing others biased
judgements align with their own biases ± than when they are making original judgments
themselves
- Familiarity: People are more willing to harm strangers than individuals they know
- Discounting: People tend to be far more responsive to immediate consequences than
delayed ones, especially when the delayed outcomes are uncertain
- Escalation: Its natural for people to conceal or explain away minor indiscretions or
oversights, sometimes without even realizing that theyre doing it
Problems with Proposed Reforms
- It takes very little ambiguity to produce biased judgements
-
www.notesolution.com
Unlock document

This preview shows half of the first page of the document.
Unlock all 1 pages and 3 million more documents.

Already have an account? Log in

Document Summary

Our desires powerfully influence the way we interpret information, even when were trying to be objective and impartial. Armed with the same information, different people reach different conclusions ones that favour their own interests. Bias thrives wherever there is the possibility of interpreting information in different ways. Once people equate their own interest with another partys, they interpret data to favour that party. Self-serving biases, become even stronger when people are endorsing others biased judgements align with their own biases than when they are making original judgments themselves. Familiarity: people are more willing to harm strangers than individuals they know. Discounting: people tend to be far more responsive to immediate consequences than delayed ones, especially when the delayed outcomes are uncertain. Escalation: its natural for people to conceal or explain away minor indiscretions or oversights, sometimes without even realizing that theyre doing it.

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers