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An International Meeting of American Accounting
Association
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Revisiting How Effectively the Audit Review Process Reduces Judgment Biases |
Jongsoo Han
Rutgers University - Camden
Jacob G. Birnberg
University of Pittsburgh
Donald V. Moser
University of Pittsburgh
Abstract: The literature on the audit review process suggested that “confirmation bias” may cause reviewers’ judgments to be biased in the direction of preparer’s judgment. Libby and Trotman (1993) largely alleviated concerns about the confirmation bias by showing that reviewers were more likely to recall information that was inconsistent with the preparer’s judgment. These results have been widely interpreted as suggesting that reviewing auditors’ critical perspective helps them avoid the confirmation bias. We replicated Libby and Trotman’s findings. However, additional data provide evidence that the reason reviewers attended to inconsistent information was not because they critically evaluated it, but rather because they rationalized why such information was not important so that they could downplay it when making their judgment. Consequently, despite actively attending to the inconsistent information, reviewers’ judgments still reflected a bias in the direction of the preparer’s judgment.