A theoretical model of cognitive factors that affect auditors' performance and perceived independence

Kleinman, Gary; Anandarajan, Asokan; Medinets, Ann; Palmon, Dan

doi:10.1504/ijbaf.2010.031318

Cited by 9 publications

(5 citation statements)

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“…8 Issues as to the consistency of professional judgments across time or across experts are beyond the scope of this paper. Studies of expert judgment both within accounting and out have demonstrated that even the judgments of identified experts reviewing identical stimuli differ markedly (for a literature review, see Kleinman et al 2010). Conflicting court decisions in 2013 as to the legality of key components of the Affordable Care Act (a.k.a., Obamacare) are an instance of this.…”

Section: Financial Accounting Standards Boardmentioning

confidence: 99%

“…11 An outside audit firm, reviewing the issues at stake and less ego-involved in the dispute may be able to bring a fresh eye to the dispute and avoid a seemingly irrational buildup of commitment to a position that the client finds objectionable, and that the other auditing firm finds unnecessary. The phenomenon of inter-expert disagreement is well known (for a literature review, see Kleinman et al 2010). Accordingly, even apart from pecuniary motivations to support a rival auditor's client in a dispute with the auditor, the nonincumbent auditor may indeed agree with the client.…”

Section: Audit Firmsmentioning

confidence: 99%

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The Accounting Court: Some Speculations on Why Not?

2015

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The accounting court proposed by Spacek (Account Rev 33(3):368, 1958) was a potent and controversial idea. The court would provide a venue to which auditing firms and clients could bring disputes over the application of accounting principles and over time would build a database of casework illustrating the court's decisions on proper application and interpretation of accounting principles. In this paper, we contribute to the literature on the accounting court and on standard setting by analyzing group value orientations and motivations that should promote the likelihood of an accounting court appearing in these times. We base our analysis in value group theory (Shakun 1988 Evolutionary systems design: policymaking under complexity and group group decision support systems. Holden-Day, Oakland, CA.), an analysis rooted in an examination of operational and terminal values of key participants. The analysis brings to light a contradiction between the terminal values of the key players and the actions of those players. We argue that common conditions of existence came between the operational goals and terminal values in the accounting domain and key actors willingness to seek the specified values. This analysis provides a flexible but powerful tool for analyzing motivations that may influence behavior of key organizations in the accounting domain. B Asokan Anandarajan

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Section: Financial Accounting Standards Boardmentioning

confidence: 99%

Section: Audit Firmsmentioning

confidence: 99%

The Accounting Court: Some Speculations on Why Not?

2015

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“…), as well as more judgmental issues (What is the proper valuation of a financial institution's loan loss reserves?). Even in the more judgmental areas, areas more subject to client influence (Kleinman et al, 2010), there is a known lower bound on what the reserve should be (zero). Furthermore, in the auditing and accounting arenas, issues of interpretation are not shrouded in the vagaries of historically bound, philosophic and culturallyladen language as, for example, are issues of personal privacy.…”

Section: Cultural Expectationsmentioning

confidence: 99%

“…Whether this additional exposure of auditor reasoning would improve audit quality, consistent with US Supreme Court Justice Louis D. Brandeis's oft quoted statement that sunlight is the best disinfectant (Grumet, 2003), remains to be seen. Individuals can, of course, determine a conclusion beforehand and then, using motivated reasoning, come up with reasons that support that conclusion afterward (e.g., Kahan, 2011;Kleinman et al, 2010). To the extent that individuals are seduced by the intended conclusion to believe in the reasoning they develop to support that conclusion, the individual themselves may not know whether they are "independent" or not!…”

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confidence: 99%

Who's to Judge? Understanding Issues of Auditor Independence Versus Judicial Independence

Kleinman

Anandarajan

Palmon

2012

Accounting, Economics, and Law

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We explore differences in the roles of auditors and judges in the United States, emphasizing the issue of independence for each group. We examine factors that influence the independence of US judges and auditors. We use examples to highlight the potential impact of various factors on each profession and explore how they are affected by differences in the nature of their responsibilities. Based on these examples, we find generalized lessons that are applicable to each profession and explore further questions that should be asked. While much research has been done on factors that could potentially influence auditor independence, no research to date has examined lessons that auditors can learn from the judicial profession with respect to independence in the United States setting, and vice versa. This paper is a contemplation of the different threats that exist to independence and the difficulty in achieving it in two differently structured fields where its attainment was important for achieving societal ends associated with the professional roles. We hope through this discussion and presentation to broaden the perspective of both professions (judges, auditors) by furthering their understanding of the independence dilemmas facing occupants of the other's role.

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“…The forensic accountants and auditors may be unaware of how their decision making may be affected by irrelevant or distracting factors (e.g., Kleinman, Anandarajan, Medinets, & Palmon, 2010;Kleinman & Palmon, 2001). It is imperative, therefore, to emphasize that students should work diligently to keep an open mind.…”

Section: Inattentional Blindness In Actionmentioning

confidence: 99%