The Effect of Cognitive Biases such as Under Reaction, Anchoring, Availability & Conservatism on Auditor Errors

Document Type : Original Article

Authors

1 PhD in Accounting, Department of Accounting, Faculty of Management and Economics,Sciences and Research Branch, Islamic Azad University, Tehran, Iran

2 Department of Finance, Esfarayen Branch, Islamic Azad University, Esfarayen, Iran,

Abstract

Abstract :According to the psychological and auditing literature, auditors' professional knowledge and choices are influenced by perception, judgment and decision making processes and it can play an important role in the occurrence of audit errors. Although, various factors affect the occurrence of audit errors, but the role of factors arising from the auditor's error and their cognitive biases is undeniable. This research investigates the effect of some cognitive biases on auditor errors. It is focused on the under reaction bias, anchoring bias, availability bias and conservatism bias as the main cognitive biases in this paper. The statistical population includes the auditors of the Iranian Auditing Association and researcher-made questionnaires with validity and reliability were distributed among them and the obtained data were analyzed using smart PLS software. The results showed that the cognitive biases examined based on the degree of priority and most impact included anchoring bias (46%), conservative bias (41%), under reaction bias (15%) and availability bias (5%) respectively have the ability to predict auditors.

Keywords

Main Subjects

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References

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Budget and Finance Strategic Research
Volume 3, Issue 3 - Serial Number 11
Autumn Quarterly
December 2022
Pages 103-133

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History

  • Receive Date: 12 August 2022
  • Revise Date: 27 November 2022
  • Accept Date: 10 December 2022

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