Outline
- Abstract
- Keywords
- 1. the Role of Standard Setters
- 2. the Role of Financial Statement Preparers
- 3. the Role of Auditors and Enforcement Bodies
- References
رئوس مطالب
- چکیده
- کلید واژه ها
- 1. نقش استانداردگذاران
- 2. نقش تهیهکنندگان گزارش مالی
- 3. نقش حسابرسان مالی و هیأت های اجرایی
Abstract
This short letter argues that insights from behavioral accounting are highly relevant for studies examining human aspects in finance. This is important because research focusing on the users of financial information and their characteristics often assumes that financial information in itself is neutral, unbiased and value-free. However, the information used by investors and capital markets participants for making economic decisions is prepared by accountants, who use their professional judgments by interpreting and applying accounting standards.
The role of auditors and enforcement bodies
Auditing is inherently a judgment process as auditors are applying their professional judgments in order to form an overall assurance regarding the financial statements of a company. As such, the quality of the auditor’s judgments may be affected by personal characteristics. Indeed, Gul et al. (2013) provide evidence that audit quality varies across individual auditors. Factors influencing judgments and decisions in auditing include culture, auditor knowledge and expertise, organizational and professional commitment, and cognitive limitations (see Nelson and Tan 2005 for a review). As auditors work under significant time pressures particularly during the year-end audit, heuristics and biases may influence the judgments of auditors. Additionally, the interaction between auditor and other stakeholders such as clients and peers in task performance may influence the audit opinion pertaining to the financial statements (Nelson and Tan 2005).
Finally, non-compliance and different practices are likely to occur if auditors and companies are weakly monitored or the regulatory environment in a particular country is relatively weak (Nobes 2013). For example, Poudel et al. (2014) highlight that the relatively weak regulatory body in Nepal is one factor causing an inconsistent application of IFRS within that country.