Title: A theoretical model of cognitive factors that affect auditors' performance and perceived independence

Authors: Gary Kleinman, Asokan Anandarajan, Ann Medinets, Dan Palmon

Addresses: Graduate School of Business, Touro College, 65 Broadway, New York City, NY 10006, USA. ' School of Management New Jersey Institute of Technology, Martin Luther King Boulevard University Heights, Newark, NJ 07102, USA. ' Department of Accounting and Law, Cotsakos College of Business, 1600 Valley Road, William Paterson University, Wayne, NJ 07470, USA. ' Department of Accounting, Business Ethics and Information Systems, Rutgers University, 180 University Avenue, Newark, NJ 07102, USA

Abstract: Auditor independence is a guiding principle of the relationship between auditors and clients, and a key component of outsiders| acceptance of firms| financial statements. As recent accounting scandals have illustrated, the audit process is meaningless without the auditor|s impartial judgement. While Kleinman, Palmon and various colleagues (1998, 2000a, 2001 and 2003) have developed a framework based on the behavioural science literatures to understand the auditor-client relationship, this framework excludes the effects of expertise, cognitive heuristics and affect on the outcomes of situations that might challenge auditor independence. This paper draws on the Mayer (2003) and Libby and Luft (1993) models and other literature to develop a cognitive model of factors that may affect perceived independence and auditor|s performance. This model should help interested parties better understand situations that may impair the perceived independence of auditors. Suggestions for improving the auditor|s reasoning process are presented, as are research suggestions.

Keywords: auditor performance; auditor independence; heuristics; cognitive dissonance; perceived independence; auditing; impartial judgement; auditors.

DOI: 10.1504/IJBAF.2010.031318

International Journal of Behavioural Accounting and Finance, 2010 Vol.1 No.3, pp.239 - 267

Published online: 31 Jan 2010 *

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