Home / Summaries / Class notes - Judgment & Decision Making in Accounting / paper-auditors-information

Joyce & Biddle (1981)

4 important questions on Joyce & Biddle (1981)

What is/are the judgment(s) or decision(s) that are studied in this paper?

This paper studies the auditors’ judgments when they assess their clients’ financial statements. Other types of judgments that are evaluated in this paper are the fundamental tasks of auditors such as the choice of information collection, the timing and manner of collecting it as it will have different implications.

What is/are the judgment(s) or decision(s) that are studied in this paper?

This paper studies auditors' judgments when they assess their client's financial statements. In order for auditors to formulate opinions about the fairness of the client’s financial statements, they need to collect sufficient audit evidence to substantiate such claims. Auditors use their professional judgment to determine the type and amount of information to collect, the timing and manner of collecting it, and the implications of the information collected.

What is/are the (normative) benchmark(s) against which the judgment(s) or decision(s) are compared?

The normative benchmark is the Bayes theorem. The theorem provides a normative model for how we should update our beliefs (personal probabilities) in the presence of new information.

Can you think of a way in which the effect of this behavioral factor might be mitigated? Please describe.

Heuristics, and in particular the anchoring and adjustment heuristic, can be mitigated by a system where audits would mandatorily be analyzed by different auditors so that the audit in question would be checked with a fresh, different perception. That way, the anchoring effect could be reduced, and the audit would be more represented by normative judgments.

The question on the page originate from the summary of the following study material:

Judgment & Decision Making in Accounting

View summary