A recent article in CAmagazine
notes that, when faced with the 570-plus requirements in the Canadian auditing
and quality control standards, generic checklists may be a great way to start
an audit, but they can lead to a lessened focus on judgment. It states that
“...ours is a thinking profession, not one that relies on a mechanical approach
to deliver a product. Every audit is unique so reliance on a common set of
checklists is unlikely to be efficient, nor will it result in an effective
audit.”The relatively new Canadian auditing standards (CAS) clock in at 800-plus pages. Many experienced auditors rely on generic checklists developed in-house or by third parties to cope with the volume, with reliance on generic checklists appearing easier than crafting their own. However, “Research shows that reliance on systems designed to do your thinking for you can reduce your ability to make good judgments. Professional judgment is the crux of our profession. It is what the public expects and what clients pay for.”
“Systems with built-in decision-making capabilities may be easy to use, but they don’t encourage the thought required for difficult decision-making. A point-and-click operation is not the same as thinking through a process. In an effort to make application software easy, designers often bury the underlying logic in the application so users can focus on moving or clicking through the program to reach their goal quickly. While this is an admirable design goal for many computer applications, it is the antithesis of a quality audit process. Removing the decision-making process could impair a user’s ability to think deeply — and deep thinking is essential in making sound judgments.”
“This situation is more than relevant to the audit profession. Auditors must think their way through every aspect of an audit to decide what evidence needs to be obtained, evaluate the quality of that evidence and then use this information to make a myriad of professional judgments. Just because an auditor understands the individual steps suggested by the expert system does not mean he or she grasps the bigger picture of how the steps fit together. Bottom line: a successful audit is not built on a system that encourages superficial thought.”
“Generic checklists can lead to a lessened focus on professional judgment, which is the antithesis of the intent of CAS. However, customizing checklists for each audit can heighten professional judgment. Once customized, audit automation provides the ability to carry your unique approach forward annually — tailoring changes as appropriate, improving recoveries and reducing engagement risk.”
To learn more, read the article “Are checklists killing our profession?” by Phil Cowperthwaite, FCA in the September 2012 issue of CAmagazine online.
