Developing strategies to heighten professional skepticism and help overcome judgment biases

A current CAmagazine article observes that “There are many inherent barriers to making good judgments, but they can be overcome with some effort and proper safeguards.” It also notes that “Professional skepticism is a cornerstone of audit quality. It defines the quality of each audit judgment and, to a significant extent, is the essence of the audit. The connection between skepticism and professional judgment is complex, which research across many professional disciplines is proving. The relationship needs to be better understood to improve our audits.”

According to the author, “Skepticism is a questioning attitude; exercising professional judgment is a process required in forming an opinion of value. Having a skeptical attitude is essential for auditors when analyzing evidence, looking for inconsistencies in data and considering explanations from management. That attitude shapes the actions required in forming a professional judgment. And auditors need to make every judgment count on every audit they undertake.”

The article concludes that “Unconscious cognitive errors are very real human traits. Usually we are not conscious of their effect on our day-to-day judgments. While these traits can result in efficient and reasonably accurate choices for most of our routine decisions, our unconscious bias is the enemy of skepticism in complex situations. Basing conclusions on insufficient evidence, an inappropriate starting point, and recent memories can get professionals into serious trouble.”

Nonetheless, “Judgment bias can be overcome, but not without effort. Implementation of safeguards in every audit will help guard against inherent bias. Many of the larger accounting firms have developed strategies to heighten professional skepticism and help overcome judgment bias.” Learn more by reading the article “Tougher than you think” by Phil Cowperthwaite, FCA in the March 2013 edition of CAmagazine online. In addition, review other informative research and guidance materials on professional skepticism.