Self-Serving Bias and Affective Reactions to Audit Review

• In Event: Socialization, Audit Review & PCAOB Inspections

Abstract

This study focuses on understanding affective reactions arising from real audit review experiences from the perspective of 197 subordinate auditors. Specifically, we utilize self-serving bias and affective events theories to explore how subordinate auditors understand, rationalize (i.e., to whom or what they attribute their experience) and internalize (i.e., the feelings the review event generates) recollections of their best and worst audit review experiences. We find that auditors explain their best review experiences as attributable to their own merits, evoking feelings of appreciation and control. Worst review experiences are primarily rationalized as the fault of the reviewer, evoking feelings of invisibility and powerlessness, particularly when the reviewee receives an “average” rating. Some reviewees perceive average ratings as inevitable, having no ability to differentiate themselves in what they perceive to be a fundamentally flawed review system. Even performing the role of “in-charge” as a first- or second-year associate is not always considered exceptional (or differentiating); it can simply be a direct consequence of senior and manager turnover, with serious implications for audit quality.

Authors

• Kimberly D Westermann, Cal Poly

• Jean C Bedard, Bentley University

• Lindsay Andiola, Virginia Commonwealth University