Discussion of 'Debiasing Framing Effects in Auditor's Internal Control Judgments and Testing Decisions'

Posted: 22 Nov 2014

See all articles by J. Efrim Boritz

J. Efrim Boritz

University of Waterloo - School of Accounting and Finance

Date Written: 1997

Abstract

It gives me great pleasure to be the discussant of the paper by Emby and Finley. My comments are divided into three parts. First, I shall briefly summarize the paper and its key findings. Then I shall review the context of the paper and raise questions about the authors' interpretation of their study and findings. Finally, I shall conclude with a brief summary of my comments.

Summary of Emby and Finley's paper: The authors gave auditors materials summarizing internal control strengths and weaknesses. The background information provided in both scenarios was identical. They asked the subjects to plan substantive tests to be carried out in connection with the inventory audit. Then, they gave subjects one of two version of a set of additional information about seven internal control cues and asked them to make a revised decision about the extent of substantive testing required. When they asked the subjects to base their decision on internal control strengths, they obtained one result. When they asked the subjects to make the same decision based on internal control risks, they obtained another result. The differences in extent of substantive tests proposed were significant. The authors interpret this finding to be an instance of a framing effect.

Furthermore, the authors found that when they asked a subset of the subjects to consider all the control related information cues one by one and to rate the direction and relevance of the evidence, the framing effect disappeared. The authors interpret this finding as an example of an effective debiasing technique for eliminating the effects of the "framing bias" induced by using the word risks in one version of the task and the word strengths in another version of the task.

The paper is deceptively simple. It is well written, clear, and uncluttered. The design appears to be straightforward, and the findings are significant and noteworthy. I like the use of the initial judgment as a covariate in the analysis, which is competently carried our and clearly described. Although the paper appears to be simple, I believe that it provides us with an opportunity to consider a number of very subtle issues.

Keywords: internal control, debiasing technique, framing bias

Suggested Citation

Boritz, Efrim, Discussion of 'Debiasing Framing Effects in Auditor's Internal Control Judgments and Testing Decisions' (1997). Contemporary Accounting Research, Vol. 14, No. 2, Summer 1997, Available at SSRN: https://ssrn.com/abstract=2528731

Efrim Boritz (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

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