Risk of management bias
Management bias is a lack of neutrality by management in preparing information, including accounting estimates. Indicators can arise from a pattern of optimistic assumptions or selective choices, although each indicator does not necessarily establish fraud.
Worked example
Management repeatedly selects the highest plausible sales-growth assumption despite adverse evidence.
Common mistake
Do not treat every estimation difference as deliberate bias; investigate the pattern and supporting evidence.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AA | Supporting | September 2026–June 2027 |