Requirement 3 Auditor Bias Matrix As a result of your audit teams planning discussions, members of the audit team have started performing some audit procedures Table 2 summarizes some of the audit procedures performed Your audit manager has asked you to consider the threat of any cognitive bias related to the audit procedures described below and propose appropriate audit responses Please review AICPAs SAS 142 Audit Evidence , which describes potential bias in interpreting audit evidence (AICPA 2020) Use this information to complete the Auditor Bias Matrix provided in Table 2 You can access SAS No 142 at the following link sas 142 pdf (aicpa org) To complete Table 2, first evaluate the audit procedures and evidence described in Column 2 and determine any auditor bias in the description Then L J should consider their own susceptibility to cognitive biases in evaluating audit evidence In Column 3, identify the auditor bias that relates to the procedures and evidence described in Column 2 Auditor biases include availability bias, confirmation bias, overconfidence bias, anchoring bias, and automation bias Each auditor bias is used only once In Column 4, refer to SAS 142, page 28 (forthcoming as AU C Section 200 A27) and provide the definition of the bias as stated in the standard and include the citation for the definition (e g , AU C 200 A27) In Column 5, evaluate the susceptibility of the audit evidence to the auditor bias identified in Column 3 and propose additional testing the auditors should perform Column 1 Account Column 2 Audit Procedure and Evidence Column 3 Most Directly Related Auditor Bias Column 4 Bias Definition Column 5 Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform Accounts Receivable Revenue from dog walker listing fees Transaction 1 To test the existence assertion for MMs accounts receivable, L J sent confirmations to a sample of dog walkers to confirm the fee each paid to be listed on MM The confirmation response rate was relatively high, yet there were a number of nonreplies L J may send out a second request for confirmations or consider the confirmations received as sufficient Since the response rate was relatively high, L J is considering if the evidence provided by the confirmations available is sufficient Column 1 Account Column 2 Audit Procedure and Evidence Column 3 Most Directly Related Auditor Bias Column 4 Bias Definition Column 5 Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform Revenue from the 1 fee for orders placed with Pawsome Treats via the app (Pamazon delivers the order) Transaction 4 To test the accuracy of MMs revenue recognized from the 1 fee placed on orders of dog food through the app, L J selected a sample of dog food orders and recalculated the fee associated with each transaction MM confirmed to L J that their automated system captures the 1 fee for each dog food transaction and reflects the fee at the accurate amount for each transaction In MMs initial sample, several transactions captured a fee that did not reflect 1 of the transaction L J reviewed an event log generated by the system that noted no exceptions to the processing and recording of fee revenue L Js auditors consider relying on evidence generated by the system Column 1 Account Column 2 Audit Procedure and Evidence Column 3 Most Directly Related Auditor Bias Column 4 Bias Definition Column 5 Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform Revenue from the 1 fee for orders placed with Pawsome Treats via the app (Pamazon delivers the order) Transaction 4 To test the accuracy assertion for revenue MM earned through pet food orders, L J verified that only a percentage (1 ) of the order is recorded as fee revenue the food order and delivery fee revenue are remitted to Pawsome Treats and Pamazon, respectively L J initially evaluated the risk of MM improperly including the food and delivery value in its revenue as low therefore, L J believed that they would find that revenue was recorded accurately L J found several deviations from their expected results where the revenue for the transaction was inappropriately included the total value of the pet food order While the new evidence contradicts L Js initial evaluation, the transactions involved were relatively small Column 1 Account Column 2 Audit Procedure and Evidence Column 3 Most Directly Related Auditor Bias Column 4 Bias Definition Column 5 Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform Revenue from dog owner using the app to locate a dog walker Transaction 2 L J developed an independent expectation for revenue from dog owner orders for locating dog walkers (taking into account market trends) and compared this expectation to the current period revenue A significant difference between L Js expectation and MMs revenue was detected L J is confident that their assessment of the expectation for MMs revenue from dog owner orders is accurate and they are skeptical that there would be an explanation for the amount to be different from their calculation Column 1 Account Column 2 Audit Procedure and Evidence Column 3 Most Directly Related Auditor Bias Column 4 Bias Definition Column 5 Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform Valuation of Megs Mutts mobile application (the app) L J reviewed MMs app value presented on its balance sheet and initially judged the valuation to be reasonable To test the valuation of the app, L J recalculated the value of the app by applying a valuation methodology compliant with financial reporting guidance for valuing software A significant difference between MMs valuation of the app and L Js calculation of the apps value was detected Because L J initially judged MMs valuation of the app to be reasonable, they are considering if their calculation of the apps value suggests a valuation different from the initial amount reported by MM

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Requirement 3: Auditor Bias Matrix As a result of your audit teams planning discussions, members of the audit team have started performing some audit procedures.

Requirement 3: Auditor Bias Matrix

As a result of your audit teams planning discussions, members of the audit team have started performing some audit procedures. Table 2 summarizes some of the audit procedures performed. Your audit manager has asked you to consider the threat of any cognitive bias related to the audit procedures described below and propose appropriate audit responses. Please review AICPAs SAS 142 Audit Evidence, which describes potential bias in interpreting audit evidence (AICPA 2020). Use this information to complete the Auditor Bias Matrix provided in Table 2. You can access SAS No. 142 at the following link: sas-142.pdf (aicpa.org)

To complete Table 2, first evaluate the audit procedures and evidence described in Column 2 and determine any auditor bias in the description. Then:

L&J should consider their own susceptibility to cognitive biases in evaluating audit evidence. In Column 3, identify the auditor bias that relates to the procedures and evidence described in Column 2. Auditor biases include availability bias, confirmation bias, overconfidence bias, anchoring bias, and automation bias. Each auditor bias is used only once.
In Column 4, refer to SAS 142, page 28 (forthcoming as AU-C Section 200.A27) and provide the definition of the bias as stated in the standard and include the citation for the definition (e.g., AU-C 200.A27).
In Column 5, evaluate the susceptibility of the audit evidence to the auditor bias identified in Column 3 and propose additional testing the auditors should perform.

Column 1: Account	Column 2: Audit Procedure and Evidence	Column 3: Most Directly Related Auditor Bias	Column 4: Bias Definition	Column 5: Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform.
Accounts Receivable /Revenue from dog walker listing fees Transaction 1	To test the existence assertion for MMs accounts receivable, L&J sent confirmations to a sample of dog walkers to confirm the fee each paid to be listed on MM. The confirmation response rate was relatively high, yet there were a number of nonreplies. L&J may send out a second request for confirmations or consider the confirmations received as sufficient. Since the response rate was relatively high, L&J is considering if the evidence provided by the confirmations available is sufficient.
Column 1: Account	Column 2: Audit Procedure and Evidence	Column 3: Most Directly Related Auditor Bias	Column 4: Bias Definition	Column 5: Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform.
Revenue from the 1% fee for orders placed with Pawsome Treats via the app (Pamazon delivers the order) Transaction 4	To test the accuracy of MMs revenue recognized from the 1% fee placed on orders of dog food through the app, L&J selected a sample of dog food orders and recalculated the fee associated with each transaction. MM confirmed to L&J that their automated system captures the 1% fee for each dog food transaction and reflects the fee at the accurate amount for each transaction. In MMs initial sample, several transactions captured a fee that did not reflect 1% of the transaction. L&J reviewed an event log generated by the system that noted no exceptions to the processing and recording of fee revenue. L&Js auditors consider relying on evidence generated by the system.
Column 1: Account	Column 2: Audit Procedure and Evidence	Column 3: Most Directly Related Auditor Bias	Column 4: Bias Definition	Column 5: Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform.
Revenue from the 1% fee for orders placed with Pawsome Treats via the app (Pamazon delivers the order) Transaction 4	To test the accuracy assertion for revenue MM earned through pet food orders, L&J verified that only a percentage (1%) of the order is recorded as fee revenue; the food order and delivery fee revenue are remitted to Pawsome Treats and Pamazon, respectively. L&J initially evaluated the risk of MM improperly including the food and delivery value in its revenue as low; therefore, L&J believed that they would find that revenue was recorded accurately. L&J found several deviations from their expected results where the revenue for the transaction was inappropriately included the total value of the pet food order. While the new evidence contradicts L&Js initial evaluation, the transactions involved were relatively small.

Column 1: Account

Column 2: Audit Procedure and Evidence

Column 3: Most Directly Related Auditor Bias

Column 4: Bias Definition

Column 5: Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform.

Revenue from dog owner using the app to locate a dog walker

Transaction 2

L&J developed an independent expectation for revenue from dog owner orders for locating dog walkers (taking into account market trends) and compared this expectation to the current period revenue. A significant difference between L&Js expectation and MMs revenue was detected. L&J is confident that their assessment of the expectation for MMs revenue from dog owner orders is accurate and they are skeptical that there would be an explanation for the amount to be different from their calculation.

Column 1: Account

Column 2: Audit Procedure and Evidence

Column 3: Most Directly Related Auditor Bias

Column 4: Bias Definition

Column 5: Evaluate how the evidence from the audit procedure is susceptible to auditor bias and additional testing the auditors should perform.

Valuation of Megs Mutts mobile application (the app)

L&J reviewed MMs app value presented on its balance sheet and initially judged the valuation to be reasonable. To test the valuation of the app, L&J recalculated the value of the app by applying a valuation methodology compliant with financial reporting guidance for valuing software. A significant difference between MMs valuation of the app and L&Js calculation of the apps value was detected. Because L&J initially judged MMs valuation of the app to be reasonable, they are considering if their calculation of the apps value suggests a valuation different from the initial amount reported by MM.