As auditors, we’ve been taught over and over again to maintain professional skepticism when performing our audits. But as the landscape of companies change, so does our audit approach. With the increased use of technology and longevity of our client base, we need ensure our eyes are open and we ask the right questions.
Bias arises when we come to a preliminary conclusion and attempt to “fit” the audit evidence into our conclusion. According to an article in the Journal of Accountancy, there are five ways to overcome bias.
- Don’t jump to conclusions – gather all evidence available prior to forming conclusions.
- Brainstorming – develop three possible reasons for a particular fluctuation. This has been shown to be the most effective way in applying analytics, as three is enough to provide more than one possible reason for a fluctuation and not too cumbersome to cloud a possible conclusion.
- Identify it – always take note of identified reasons for a fluctuation and share those with the team to talk through possible conclusions on the finding.
- Prove yourself wrong – try to discredit your conclusions so that you can identify possible errors before incorrectly coming to the wrong conclusion.
- Circle back – before coming to a final conclusion, evaluate any new information that comes to light after the conclusion has been reached.
Our audits will benefit from the implementation of these simple steps in the form of efficiently performed audit procedures and resulting comprehensive conclusions. This will also be a win for our clients, as we won’t steer ourselves down the wrong path and allowing the audit to be completed in a quicker fashion. Either way, by performing these steps we can deter bias from creeping into our lives.
The steps above are not strictly related to the performance of an audit. These steps can be applied in many other situations, both personally and professionally, as well.
By Leslie A. Lee, CPA