According to a recent article, “Threats of inherent bias in making judgments can be overcome if processes include appropriate safeguards.” The article notes that “Professional skepticism and judgment are two hot-button issues in the audit world. Many experienced auditors are finding the mounting questions vexing, with the implied criticism of their judgment process.”
Attention to professional judgment and skepticism comes at the same time as advances in cognitive psychology. There is increased attention on the way our brains are programmed to make judgments. It turns out that making good judgments is not intuitive and is much more difficult than initially realized. In fact, our brains are programmed to make snap judgments, often based on little evidence and guided by strongly built-in unconscious biases. Although the ability to react quickly and decisively may be vital to survival in life and death situations, it is not usually helpful in conducting an audit.
The article concludes that “Audits of micro-entities may be low risk by definition, but significant judgments are still necessary and auditors must still approach these engagements with a skeptical attitude. Unconscious biases can have a detrimental impact on auditor judgments. Regardless of the size of the audit team, it is important to have safeguards to protect against these unconscious threats. A rigorous process to help reduce unconscious bias in making judgments is essential in even the smallest of audits.”
For more information, read the article “Good judgments” by Phil Cowperthwaite, FCA, in the April 2013 edition of CAmagazine online. As well, see “Developing strategies to heighten professional skepticism and help overcome judgment biases” and “Are checklists killing the CA profession?” In addition, review other informative research and guidance materials on professional skepticism.
