INTRODUCTION

Addressing corporate accountability is one of the highlight in this topic in the discussion of the
Sarbanes-Oxley Act 2002. The provisions of the act include new legal restrictions and it adds
protection for the whistle blowers. Accounting firms will be monitored by the regulatory board
and creates penalties for accounting fraud. "The era of low standards and false profits is over"
even marked by George W. Bush. But in a long run, it’s not that easy. Unconscious self-serving
bias can caused auditors to accidentally falsify audits and that’s one of the main issues in
corporate auditing.

In general, people will understand information in a way where they can benefit self-interest even
auditors is trying to be objective and unbiased. Auditors tend to lessen the facts that contradict
the assurance they want and embrace the facts that support their own viewpoint.

The three structural aspects of accounting that create substantial opportunities for bias to affect
judgment are ambiguity, attachment and approval.

The ambiguity discusses about unconscious self-serving conclusions where the auditors tend to
interpret information in different ways. In attachment, there are two main points. Audits are
frequently used to build relationships that lead to consulting services. Attachment raises bias. As
a result, companies will fire accounting firms that supply unfavorable audit. And approval means
the auditors bias to approve of a client’s accounting methods. It increases the self-serving bias
when people are endorsing other biased judgments that differ with their own biases.

And the three behavioral aspects that strengthen unconscious bias are familiarity, discounting
and escalation.

In familiarity, people are much less willing to harm individuals that they know, particularly
paying clients. Discounting discusses about critical audit reports which can produce immediate
opposing consequences and then the cost of an unfair positive report is distant and uncertain.
And in escalation, the errors made by the auditor’s results to unconscious bias that may develop
into corruption.

INSIGHTS

The outcome regarding on the provisions of the Sarbanes-Oxley Act 2002 will not answer the
issue, and might even make the problem worse. The signing of this act doesn’t guarantee that
accountants and auditors will not feed their unconscious self-serving bias. Even the regulatory
boards that are in charge in monitoring accounting firm’s fraud cannot clearly identify and take
actions to raise penalties. According to George W. Bush, “The era of low standards and false
profits is over" but it is not an assurance that it is clearly over.

Auditors are unbiased and objective with integrity and independence but we cannot deny the fact
that they can also benefit a self-interest conflict in understanding the audit information. They
tend to provide assurance that support with their own evidence and viewpoint with unconscious
self-serving bias.
As I have read the article, corruption is not the main issue but the unconscious self-serving bias
made by auditors and accountant. Just as everyone assumed that accounting profession is based on
evidence, they couldn’t be any more wrong. Accountant and auditor’s walks on a thin line and
swaying to one side and may result from a risky situation. We might not realize it, but sometimes
it is after we did something that we realize how biased and unobjective we were. And that’s the
main reason why a lot of accountants and auditors have been involved in several corporate
scandals and fraud. Sometimes, even it is just a small oversight and if we look on a larger
picture, minor mistakes will create big problems that are too hard to repair without sacrificing
one’s credibility and reliability as an accountant. At the end, practitioners of the accounting
profession whose unconscious bias have lead them to destructive problems have consciously and
intentionally resulted to fraud, and in the end sacrificed his/her credibility and reliability as an
accountant.

CONCLUSION AND RECOMMENDATION

Since bias is human nature, it would be hard to detect and convince someone that he is in on the
right path. But if we look on the brighter side and we believe and trust to the work of accountants
and auditors, they can give their best possible output to lend credibility and reliability to the
financial statements. They are just human. They create mistakes and that’s part of the progress
and learning. Everyone wants change that can improve them but not to criticize them.

The systematic changes needed to solve the auditing crisis should make an utmost remedy.
Penalties are not the solution. What is needed is a new set of policies that eliminate the
incentives that create the self-serving biases, the impossible conflicts of interest.
Recommendations such as prohibiting auditors from accepting positions with audit clients for at
least five years and prohibiting audit clients from hiring individual accountants away from the
audit firms are one of the innovative reforms to avoid auditing problems. Lastly, the auditors are
given education to help them understand the unconscious errors that they make and possible
reasons that they make them.