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People

I’m not biased, am I? Logo aicpa

  Rebecca Fay, CPA, Ph.D., and Norma R. Montague,... |   Free |   AICPA |   01 Feb 2015 |   Journal of Accountancy

Increased emphasis on the use of judgment in accounting makes a high-quality decision-making process critical to the success of the profession. By reading this article and completing the decision-making quiz, you will take the first step toward improving your decisions by developing an awareness of the biases that may affect your decision-making process.

Topics covered:
  • Management accounting: People: Negotiation & decision making, Foundational
  • Employee benefit plan auditing: People: Negotiation & decision making, Foundational
  • Governmental auditing: People: Negotiation & decision making, Foundational
  • Financial accounting & reporting: People: Negotiation & decision making, Foundational
  • Assurance: People: Negotiation & decision making, Foundational
  • Not-for-profit: People: Negotiation & decision making, Foundational
  • IT management & assurance: People: Negotiation & decision making, Foundational
  • Firm practice management: People: Negotiation & decision making, Foundational
  • Tax: People: Negotiation & decision making, Foundational
  • Forensic & valuation services: People: Negotiation & decision making, Foundational
  • Fair value measurement: People: Negotiation & decision making, Foundational
  • Personal financial planning: People: Negotiation & decision making, Foundational

8 Comments/Reflections

Sivaganeshan Balaratnam

Sivaganeshan Balaratnam Oct 2017

1. Five frequently occurring biases that can affect business judgments—availability, anchoring and adjustment, overconfidence, confirmation, and rush to solve

2. I suspect I'm most wsuceptible to avaialbility and confirmation bias. 
David Burton

David Burton Sep 2017

This article highlights five common judgment biases that have the potential to influence how financial date is prepared and reported.

The five biases identified are  

(1)relying on information that is most readily accessible (availability);
(2)focusing on a preliminary amount and making an adjustment (anchoring and adjustment);
(3)overestimating abilities (overconfidence);
(4)making interpretations that support pre existing beliefs (confirmation); and
(5)failing to consider all available data (rush to solve).

Being aware of these potential biases together with the use of the professional judgment framework will guide people to 'consider the opposite' and have a more questioning sceptical attitude when financial information is initially presented.
 
Jamie Wesencraft

Jamie Wesencraft Aug 2016

A very useful article which will ensure I avoid becoming complacent with my own decision making in the workplace.

The "decision making quiz" was very useful and helped to frame the discussion in the article.

I have also been reminded as to the hows and whys my own decision making could become unintentionally bias.
Graeme Morrison

Graeme Morrison May 2016

This article doed indeed highlight some past behaviour demonstrated both by myself and auditors that have been auditing my work. It's all too easy to fall into the traps discussed and readers would certainly benefit from taking on board the points raised, although perhaps the article stops short in discussing in depth possible solutions.
Elisa Taylor

Elisa Taylor Jan 2016

Maintain awareness of the potential biases. Reconsider every step of my judgement, and consider why my judgement could be incorrect.