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In the January IDEA Update Newsletter we asked for your ideas on what makes an external auditor great. We wanted to come up with the five traits you thought were the best. However, after reviewing and collating the results of the survey, we came up with the six most common traits that you told us made an auditor great. The reason for the change from five to six is that the difference between numbers two and three and five and six was so minuscule that it was a virtual tie. These traits are what make auditors valuable in this changing world. It’s why great auditors are so highly valued.
This was not the most scientifically valid survey ever taken, but we think the results speak volumes. The methodology was to first ask for open responses through the January IDEA Update Newsletter to determine what auditors think are the 5 most valuable traits for auditors. The survey resulted in twelve traits. We then listed the twelve responses that were received from that survey and sent out a survey to about thirty auditors and asked them to force rank the traits from one to twelve with one being the best trait. These auditors also added a few more traits in their responses; however, we did not resurvey the respondents with these additional traits as we believe the additional responses are a subcategory of an existing category and can be dealt with in discussing those categories.
Here are the six most common traits:
Understanding the business risk is how you determine what the audit risk is. You want to know as much or more about the client than the client does. Then you will understand the business risk and can turn that knowledge into an effective and efficient audit plan. An effective and efficient audit plan means you will be auditing the right account balances and transaction cycles (effective) and auditing them right (efficient).
Numbers two and three were almost a tie which we find very interesting. What is interesting is that being very inquisitive will not get you anywhere unless you are also a good listener (number three). Remember Columbo, the humble, seemingly absentminded TV detective of yesteryear, the rumpled raincoat and the car? He was very inquisitive and also an excellent listener. A good auditor trait is to humbly question the financial information over and over again until you understand it completely.
This is interesting because the Webster definition of an auditor is "Listener." Of course to be a good listener you must also be able to ask probing questions without being offensive. This is a communication skill that requires self-confidence. Dale Carnegie teaches this skill and states that a good conversationalist is one who asks questions and then listens. Ask questions that the respondent finds interesting and then let them talk. They will walk away saying what a great conversation we just had and all the while they did ninety percent of the talking. People, in general, like to talk about themselves and if you listen they will believe that you are a great conversationalist.
Another thing to consider is to give your clients an opportunity to talk in an unstructured manner. This will allow for a more free flow of information.
Sometimes we get so caught up in the day to day press of business (and life) that we don’t stop to think what an important and learned profession we have chosen to embrace. Our auditing standards are a code of the highest principles of conduct for our profession. But they are not a body of rigid rules to be blindly followed. Great auditors understand this and know how to apply the standards to each unique situation. A good understanding of the audit standards will enable you to become a proficient auditor. A proficient auditor is one who is effective (audits the right thing) and efficient (audit it right).
Remember how skeptical Columbo acted? He would have made a great auditor! In auditing, we must be very careful not to lose our skepticism. If we lose it we will stop being very inquisitive (which is the number two trait of great auditors). Then we might as well just sell our opinions. The standards define skepticism as being neutral. You neither believe nor disbelieve. President Reagan defined this as "Trust but verify." That’s the approach we should take.
There was only a slight difference between this trait and number five. Our clients are using the latest most sophisticated tools available to them. How can we audit effectively and efficiently using anything less than our clients do? Within the last generation, data analysis software – such as IDEA – has become essential for almost every audit. The auditing standards infer that these tools are necessary to perform an effective and efficient audit. As important, audit results have been proven to be more effective and efficient using these tools. People using these tools say that they learn so much more about the client that their comfort level increases tremendously. In addition, when using these tools there is much less time spent on the audit while increasing the comfort levels of the auditors.
Great external auditors are not content to repeat the successes of the past. For them, every audit is an opportunity to find new creative ways to obtain the best from their tools and themselves.
Remember – good external auditors get the job done. Great external auditors help inspire the rest of us and lift up the entire profession. Do you have the above traits? If the answer is yes, then you are probably already a great auditor.