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    To What Extent are Auditors’ Attitudes toward the Evidence I...
    research summary posted September 19, 2013 by Jennifer M Mueller-Phillips, last edited September 19, 2013, tagged 09.0 Auditor Judgment, 09.04 Going Concern Decisions, 11.0 Audit Quality and Quality Control, 11.09 Evaluation of Evidence 
    To What Extent are Auditors’ Attitudes toward the Evidence Influenced by the Self-Fulfilling Prophecy?
    Practical Implications:

    This study is important to regulators, standard setters, users of financial information and the auditing professions as it relates to the going concern evaluation and biases in auditor judgment.  If auditors are motivated to achieve a desired result to ensure that a client continues, then the negative perception of the going concern opinion and the public’s expectation gap of what a going concern means will remain.  As such, the profession needs to evaluate whether the self-fulfilling prophecy exists and ways to address the lack of knowledge surrounding the going concern opinion.

    For more information on this study, please contact Andres Guiril.


    Guiral, A., Ruiz, E. and W. Rodgers. 2011. To What Extent are Auditors’ Attitudes toward the Evidence Influenced by the Self-Fulfilling Prophecy? Auditing:  A Journal of Practice and Theory 30 (1): 173-190.

    Going concern evaluation, self-fulfilling prophecy, attitude toward the evidence, motivated reasoning, framing
    Purpose of the Study:

    This study seeks to evaluate the self-fulfilling prophecy effect and the impact that is has on biasing auditor judgments in a going concern setting.  The authors use the self-fulfilling prophecy effect in their experiment by creating instruments that may influence an auditor’s decision to arrive at a specific conclusion given how the information is framed and presented.  A motivated reasoning theory is used to understand how asymmetrical evidence is evaluated by auditors and how it influences the decision-making process.  Furthermore, there is also a notion that auditors that are motivated to arrive at a specific conclusion may evaluate audit evidence in a way that causes them to arrive at this desired outcome.  More weight may be assigned to the evidence that supports the preferred outcome. 

    In the going-concern context, an auditor may believe that issuing a going-concern opinion implies that the client will inevitably go bankrupt.  A client’s bankruptcy will then ultimately result in the auditor’s loss of audit fees.  Given this, the auditor’s self-fulfilling prophecy may create a strong desire for the client to continue, which, in turn, may bias the auditor’s judgment of audit evidence.  As a result, the auditors may weigh the audit evidence that supports the viability of the client’s business and may please less weight on evidence that is to the contrary in order to forego the potential issuance of a going concern opinion.  The authors of the study hypothesize that authors are influenced by the stigma that a going concern opinion may decrease the client’s ability to continue.  Issuing an unqualified opinion provides the appearance that client is viable and results in the auditor retaining the client’s fees. 

    Design/Method/ Approach:

    The authors perform an experiment using 88 partners and senior managers from an international accounting firm.  The research design was a 2x2 between-subjects design.  The participants were asked to assess the going concern status of a client with different groups of participants receiving confirming or disconfirming evidence.  The framing condition was in the context of whether the company’s operations were deemed to viable.  Specifically, the auditors were asked to evaluate whether the client had the “ability to continue to exist” versus whether there was a “possibility that a client will fail.”  The participants are also presented with mitigating factors (i.e. plans to cut production costs, receive a grant from the government, etc.) and contrary evidence (i.e. potential employee strikes, a credit line will not be renewed with a bank and the use of another bank will raise interest costs).


    The results of the study indicating that auditor’s expectation of a desired outcome tends to influence their evaluation of audit evidence so that they can achieve that desired outcome (i.e. not issue a going concern opinion). The auditors had a greater sensitivity to mitigating factors and had a lower tendency to favor contrary evidence.

    Audit Quality & Quality Control, Auditor Judgment
    Evaluation of Evidence, Going Concern Decisions, Going Concern Decisions