“Internal audits evaluate a company’s internal controls, including its
corporate governance and accounting processes” (Tuovila et.al.
2021). By doing so, auditors can determine how efficient a company
is running and where it can make improvements. However, as I
learned in the article Toward a more Perfect Objectivity, internal
auditors must deal with unconscious bias. This bias may inadvertently
affect their findings and cause serious issues for the company. There
are four main biases faced by auditors. First is availability, in which
auditors tend to only focus on prominent information. Second is
anchoring, which is when auditors use previous audits and other old
information to begin their audit. Next is confirmation bias. This is
when an auditor ignores or overlooks evidence that does not support
the findings thus far. Finally, there is overconfidence bias, in which an
auditor may overestimate their knowledge and ability.
I feel like external auditors would not feel the affects of these biases
the way an internal auditor would. The internal auditors work for the
company in which they audit and if the company doesn’t do well
then, they may be out of the job. The external auditors do not
necessarily worry about the health of a company in which they audit.
I do think that internal auditors have an advantage of knowing the
company in ways that an external auditor would not. The type of
environment when auditors aren’t in the building, where the
company tends to spend most of their money, and where revenues
stream from are already known to them and would not require the
additional time to learn like for the external auditors.
References:
Lager, James M.,Waymire, Tammy R., Oliver, Mark. (2022,
April) Toward a more Perfect Objectivity: Even the most Conscientious
internal auditor is subject to a pervasive range of unconscious biases that
affect professional judgement. Retrieved on August 18, 2022,
from https://resolver-ebscohost-com.ezproxy.snhu.edu/openurl?
sid=EBSCO
%3aedsggo&genre=article&issn=00205745&ISBN=&volume=79&iss
ue=2&date=20220401&spage=64&pages=64-
68&title=Internal+Auditor&atitle=Toward+a+more+perfect+objectivi
ty
%3a+Even+the+most+conscientious+internal+auditor+is+subject+to
+a+pervasive+range+of+unconscious+biases+that+affect+profession
al+judgment&aulast=Lager%2c+James+M.&id=DOI%3a&site=ftf-live
Tuovila, Alicia., James, Margaret., Rathburn, Pete. (2021, October
12) Internal Audit. Retrieved on August 18, 2022,
from https://www.investopedia.com/terms/i/internalaudit.asp
