Let me begin my testimony by noting that I’m not an expert in accounting or auditing. Instead, my expertise is in the psychology of human judgment.
The research on human judgment is relevant to debate over changes in policy because, ultimately, the proposed rule changes are designed to influence the judgmental processes of auditors.
In a series of experiments examining a self-serving bias that I believe present a close analogy to the situation of auditing, my colleagues and I presented research subjects with diverse materials from a lawsuit resulting from a collision between an automobile and a motorcycle
The rule revisions being discussed today are intended to mitigate problems associated with a lack of independence and auditor judgments. There appears to be a growing concern that some auditors are not scrutinizing the accounts of their clients with sufficient objectivity to ensure that the public is supplied with high-quality impartial judgments of companies’ financial health.
By eliminating some conflicts of interest, the proposed rule changes are intended to reduce some of the incentives that auditors would otherwise face to submit audits that benefit the firms they audit rather than the general public. (más…)