Expressed Confidence and Skepticism: The Effect of Expressed Confidence on Auditor Judgments

• In Event: Professional Skepticism

Abstract

I examine the effects of clients’ expressions of confidence on auditor judgments. The confidence heuristic suggests individuals use expressions of confidence as a cue for reliability (Price and Stone 2004). However, Van Swol (2009) posits that in some environments individuals may use expressions of confidence as a cue for deception. I examine this assertion in the auditing setting because the auditing standards require skepticism. Due to skepticism, auditors’ responses to expressions of confidence may be dependent on cues from the control and business environment (CBE). Results indicate that auditors do not use expressed confidence in their decision making when the client has a stronger CBE. In contrast, results indicate that auditors use the confidence heuristic when the client has a weaker CBE. The results provide new theoretical insights into individuals’ use of expressed confidence that extend both accounting and psychology research and may be useful to standard setters.

Author

• Sanaz Aghazadeh, Lehigh University