Question

An auditor may be inclined to follow the approach used in the prior period or on a recent engagement (especially if this approach worked well on the prior engagement), even if the approach is not the best for the current engagement.

The scenario described above is an example of the:

a. availability tendency
b. confirmation tendency
c. overconfidence tendency
d. anchoring tendency

Answer 1

The scenario described is an example of the anchoring tendency, where the auditor is inclined to follow a previous approach even if it may not be the best for the current engagement.

Step-by-step explanation:

The scenario described in the question is an example of the anchoring tendency. Anchoring bias is the tendency to rely on initial values, prices, or quantities when estimating the actual value, price, or quantity of something. In this case, the auditor is inclined to follow the approach used in the prior period or on a recent engagement, even if it may not be the best approach for the current engagement. This bias occurs because the prior or recent approach serves as an anchor for their decision-making.