DB # 4
Question 1
The article is discussing the common errors made by the management and the auditors during the preparation of the financial statements and the audit engagements. Moreover, the main causes of the errors due to the behavior of the auditors and accountants are explained, so that the professionals take account of this negligence to reduce the chances of biased information for the users. The errors such as rush to solve, confirmation bias, anchoring and adjustments, overconfidence and the availability of the evidence and the information are the main causes of biased financial information. (Fay, 2015)
Question 2
It is the responsibility of professionals to present the financial statements according to the accounting standards without any manipulation. For example, the concept of anchoring and adjustment is used to adjust the actual data from the budgeted data to reduce the gap between the budgeted data and the actual data. However, the accounting standards suggest that the management must reveal the actual data and reconsider their budgets in the next accounting period. Similarly, the concept of ‘rush to solve’ leads the management to the wrong treatments of the accounting standards. (Fay, 2015)
Question 3
In the article, the concepts discussed by the Center for Audit Quality (CAQ) are the new concepts which suggest that the team working on the auditing or preparing the accounts must perform their duties according to the international standards. Moreover, the important point is that the CAQ suggest that the audit or accounting teams must perform their duties step by step to reduce the chances of errors. Furthermore, the evaluation of data with the evidence is another new concept in the article. (Fay, 2015)
Question 4
The article is very interesting because it explains the responsibility of the auditors and the accountants towards the reliability of the accounting treatments with the proper evidence. Moreover, the professionals are advised to document their workings and present their workings as evidence to the higher management. (Fay, 2015)
Work Cited
Fay, Rebecca, and Norma R. Montague. "I'm Not Biased, Am I?" Journal of Accountancy. 02
Feb. 2015. Web. 25 Feb. 2016. <http://www.journalofaccountancy.com/issues/2015/feb/auditing-judgment-bias.html>.
