Why Auditors Do What They Do - Using Judgment

There are times, in our interactions with Government auditors, when we are left scratching our heads trying to figure out why they do some of the things that they do. When asked to explain or clarify, auditors often say that they are exercising professional judgment. Auditors typically begin an audit with a standard or pro-forma audit program. These programs are somewhat generic and the expectation is that they will add or delete audit steps based on a preliminary risk assessment. In planning and performing an audit and in reporting on the results, auditors are required by GAGAS (Generally Accepted Government Auditing Standards) to exercise professional judgment. Today we are going to look at "professional judgment".

Professional judgment includes exercising reasonable care and professional skepticism. Reasonable care concerns acting diligently in accordance with applicable professional standards and ethical principles. Professional skepticism is an attitude that includes a questioning mind and a critical assessment of evidence. Professional skepticism includes a mindset in which auditors assume neither that management is dishonest nor of unquestioned honesty.
Using the auditors' professional knowledge, skills, and experience to diligently perform, in good faith and with integrity, the gathering of information and the objective evaluation of the sufficiency and appropriateness of evidence is a critical component of audits. Professional judgment and competence are interrelated because judgments made are dependent upon the auditors' competence.

Professional judgment represents the application of the collective knowledge, skills, and experiences of all the personnel involved with an assignment, as well as the professional judgment of individual auditors. In addition to personnel directly involved in the audit, professional judgment may involve collaboration with technical experts and contracting officers.

Using professional judgment is important in determining the required level of understanding of the audit subject matter and related circumstances. This includes consideration about whether the audit team's collective experience, training, knowledge, skills, abilities, and overall understanding are sufficient to assess the risks that the subject matter under audit may contain a significant inaccuracy or could be misinterpreted.

Considering the risk level of each assignment, including the risk that they may come to an improper conclusion is another important issue. Within the context of audit risk, exercising professional judgment in determining the sufficiency and appropriateness of evidence to be used to support the findings and conclusions based on the audit objectives and any recommendations reported is an integral part of the audit process.

So, when an auditor tells you he/she is exercising professional judgment, you could ask to see the risk assessment that led to the query. But, since this is a "judgment" call, there is no easy way to refuse the request, unless it is clearly and unequivocally out of line (which happens from time to time).