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Mitigating the Consequences of Anchoring in Auditor Judgments .

William R. Kinney¹; Wilfred C. Uecker²

¹ Professor of Accounting, University of Iowa 1 · ² Associate Professor of Accounting, University of Iowa 2

ABSTRACT: This study reports the results of an experiment in which audit seniors made judgments in analytical review and compliance testing settings. In both settings, results consistent with the hypothesized use of the anchoring and adjustment heuristic were observed. With respect to analytical review, the study alerts auditors to the potential importance of forming expectations concerning a client's audited values without considering the recorded (book) values. With respect to compliance testing, a judgment procedure that mitigates the potentially dangerous consequences of anchoring when judgmental Inferences from sample information must be made is presented. Results of the compliance study were used by the Sampling Standards Task Force of the AICPA in developing Statement on Auditing Standards No. 39, entitled, "Audit Sampling."

DOI

10.2308/tar-4489441

Volume

57 (1)

Pages

55-69

Language

en

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