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‘Mismatch’ for young auditors
The whole audit process is being compromised by the social ‘mismatch’ between young, inexperienced auditors and older, more experienced client management, says award-winning research from US academics Bradley Bennett and Richard Hatfield.
Their study found that this age mismatch often impacts on the staff auditors’ willingness to gather the additional audit evidence needed to properly complete the audit confirmation task.
Young auditors, sometimes with limited experience, can find themselves in intimidating situations with more knowledgeable and experienced clients, who according to the research can often quickly become annoyed with what they perceive as silly questions.
The worry is that when young auditors are paired with these older, more experienced company accountants just 35% of them chose to meet with the accountant face-to-face to ask further questions and gather more information. When the age gap between the two was a better match some 83% of auditors wanted to meet face-to-face to ask those extra questions.
This reluctance to ask follow-up questions results in less evidence being collected and lower-quality documentation and conclusions, claimed Bennett and Hatfield. And it didn’t end there, as work papers were often prepared in a vague way, making the loss of information hard to detect during the review process.
The only saving grace in the process has been the rise in the use of email. Younger auditors are much more likely (69%) to request additional evidence this way. Bennett and Hatfield said that email curtailed the reduction in evidence collection caused by avoiding live face-to-face interaction, but did not eliminate it altogether. They said: “Overall, while electronic communication helps it does not completely erase staff auditors’ reluctance to ask follow-up questions and, importantly, such communication loses the richer context of in-person interactions.”
Bennett told PQ magazine that there may be some specific training that firms could provide to address the staff auditors’ decisions when they feel ‘outmatched’ by client management. He felt that managers and partners must be fully aware of the problem so they can address and discuss the issue in a more proactive manner.
The ICAEW’s Qualifications Director, Shaun Roberston, said current training gives its trainees the confidence to question the views of more senior members of an organisation. He stressed: “They have proved themselves to be professionally sceptical and able to give sound, objective business advice. Their experience or age does not imply a barrier to asking the full questions needed to complete a full audit.”
The ACCA’s head of audit and assurance, Andrew Gambier, was also sceptical about the report’s one-sided view of the audit process. Seeing young auditors as weak and clients as mean is too simplistic a view, he said, although he loved the authors’ psychological look at the audit process and wanted to see more of it.
In Gambier’s view, young auditors are incredibly independent and strong-minded who are not cowed by difficult clients. He felt another piece of research was missing from the report – clients who are scared of the auditors!
He was not surprised by the move to email ‘conversations’. An email from a client is much better evidence than a hand-written note!
• Bennett and Hatfield’s report, ‘The Effect of the Social Mismatch Between Staff Auditors and Client Management on the Collection of Audit Evidence’, was recently recognised with the Deloitte Wildman Medal.
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