The Influence of Behavioural Biases on Audit Judgment and Decision Making

• Post by: airjournals
• August 21, 2024
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Chukwuani, Victoria Nnenna PhD
Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria

Abstract This study investigates the influence of behavioural biases on audit judgment and decision-making, focusing on both cognitive and affective biases and their impact on audit outcomes. Behavioural biases, including mental accounting, availability, heuristic biases, and emotional factors, are identified as significant contributors to deviations from rational decision-making in auditing. The research employs a quantitative approach, utilizing survey data from 36 auditors in Nigeria, analysed through regression analysis to examine the relationship between these biases and auditors’ judgment. The findings reveal that cognitive biases, particularly heuristic and availability biases, significantly affect audit judgment, leading to potential errors in financial reporting. Affective biases, such as mood congruence and stress, also play a role in shaping auditors’ decisions, highlighting the need for comprehensive strategies to address both cognitive and emotional factors. The study underscores the importance of debiasing training and ethical organizational cultures in mitigating these biases and improving audit quality. The implications of the study are far-reaching, suggesting that audit firms and regulatory bodies should implement targeted training programs to help auditors recognize and manage these biases. Additionally, fostering a culture of professional scepticism and ethical behaviour within organizations can further reduce the impact of biases on audit judgment. The study contributes to the existing literature by offering a nuanced understanding of how behavioural biases affect audit processes and provides practical recommendations for enhancing the reliability of audit outcomes. Future research should explore the interaction between cognitive and affective biases and evaluate the effectiveness of different training interventions. Keywords Behavioural Biases; Audit Judgment; Cognitive Biases; Affective Biases; Decision-Making; Nigerian Auditors Citation Chukwuani, V. N. (2024). The Influence of Behavioural Biases on Audit Judgment and Decision Making. International Journal of Advanced Finance and Accounting, 5(2), 26-38 https://doi.org/10.5281/zenodo.13353275