© D.L. Crumbley
The Good, The Biased, and Ugly Results
Auditors are vulnerable to “unconscious bias,” because accounting is subjective and the relationship between accounting firms and clients are often tight (or internal auditors v. audited units).
Auditor may unintentionally distort the numbers in ways to mask a company’s true financial picture [or a unit].
Psychological studies show that our desires have a powerful influence on the ways we interpret information.
We tend to discount information that contradicts the conclusions we wish to reach.
Five structural aspects of accounting create opportunity for bias to influence judgment.
Attachment (They hire and fire us).
Familiarity (Not willing to harm friends).
Discounting (focus on immediate events).
Source: M.H. Bazerman et.al, “Why Good Accountants Do Bad Audits,” Harvard Business Review, November 2002.