FAR Masterclass Report - 29 March 2019: Masterclass by Anna Gold on Judgment Biases in Auditing
Although auditors are well-educated professionals, they are also human beings. This means that they are susceptible to judgment biases. Departing from psychological theories, four judgment biases were discussed during Anna Gold’s well-attended masterclass:
- Availability bias: the tendency to consider information that is easily retrievable from memory as being more likely, more relevant, and more important for a judgment.
- Anchoring bias: the tendency to insufficiently adjust away from an initial anchor.
- Overconfidence bias: the tendency to be overconfident in our judgment abilities.
- Confirmation bias: the tendency to seek and overweight confirming evidence.
It cannot be stressed enough: awareness of the existence of these judgment biases is an important first step in reducing their negative effects
Authors
Anna Gold is Professor of Auditing at Vrije Universiteit Amsterdam and Adjunct Professor at Norwegian School of Economics (NHH). She earned her PhD at the University of Amsterdam. Her research interests are in the judgment and decision-making area, primarily applied to the field of auditing. Her research has focused on the impact of regulatory changes (e.g., fraud consultation, audit firm rotation, and auditor reporting standard changes) on judgments and decisions of auditors, preparers, and financial statement users. She has also examined how auditors and audit firms manage errors and whether varying the error management climate affects auditors’ error reporting willingness and learning. Her current work focuses on how auditors use specialist advice, the communication between auditors and audit committees, and auditors’ use of audit technology.
She has published her research in outlets such as The Accounting Review, Contemporary Accounting Research, Auditing: A Journal of Practice & Theory, Accounting Horizons, Journal of Business Ethics, and International Journal of Auditing. Professor Gold currently serves as editor at The Accounting Review (2020-2023) and Maandblad voor Accountancy en Bedrijfseconomie (since 2018). She is a member of the editorial board of Auditing: A Journal of Practice and Theory.