The Influence of Cognitive Bias on Professional Judgment in Auditing: An Empirical Study from Egypt | ||
| المجلة العلمية للدراسات التجارية والبيئية | ||
| Article 96, Volume 14, Issue 4, October 2023, Pages 150-238 PDF (987.12 K) | ||
| Document Type: المقالة الأصلية | ||
| DOI: 10.21608/jces.2023.346529 | ||
| Author | ||
| Samah Ahmed Mohamed Abdel Khaleq* | ||
| Lecturer of Accounting and auditing Faculty of Commerce – Cairo University | ||
| Abstract | ||
| Audits of financial statements necessitate the utilization of professional judgment, as the procedures and the strategies outlined in auditing standards lack straightforward and clear-cut instructions for auditors to follow when conducting an audit. Although auditors are expected to adopt thorough thinking methodologies when making decisions, there is a high probability that they may not make the right decision due to the cognitive biases and judgmental traps. This study aims to examine how significant psychological biases affect auditors’ professional judgment when conducting an audit. Based on recent literature in the fields of accounting, auditing, and psychology, the researcher outlines four distinct biases that impact the quality of professional judgment for external auditors. To test the study hypothesis, the researcher collected data from 118 certified auditors for survey analysis. The study’s main finding is that cognitive biases such as self- serving bias, cognitive dissonance, jump to a conclusion and sunk-cost fallacy can negatively affect auditor’s professional judgment. The study indicates that understanding the impact of cognitive biases on auditor independence and professional judgment is critical for enhancing auditor professional judgment and improving audit quality accordingly. The study recommends that auditors should have adequate training to identify and manage their cognitive biases. Also, professional organizations and standards setter should develop procedures to minimize the impact of cognitive biases on auditors' professional judgment. | ||
| Keywords | ||
| Auditor professional judgment; Cognitive biases; self- serving bias; cognitive dissonance; jump to a conclusion; sunk-cost fallacy; Audit quality | ||
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