The article I chose is from the The CPA Journal entitled "Failure
Study: A Needed Addition to the Accounting Toolkit". I selected this
article because I think it touches on two elements of this week's
discussion - it is both recognizing the need for new tools for auditors
to use and is calling for these resources due to the historic failures of
the profession.
The article posits that the trend of perceived failures of the auditing
profession, listing global failures to detect corporate issues in audited
firms, and the rise in public perception that auditors were not
performing their duties to protect investors and the overall economy.
The article goes on to discuss Failure Studies as they are performed in
other professions. In healthcare and airline industries, critical failures
in the operating room or of a plane are investigated in detail to assess
the cause of the failure and institute new policies or practices to
prevent the failure from occurring in the future. In the auditing
profession, the changes to the processes are often driven by
regulation or law with limited internal incentives to pursue substantial
changes to the audit process.
I do agree with portions of the article. Through this course, it was
apparent that much of the audit language and process is driven by
regulatory standards that prescribe process and steps. This raises the
occasional thought that this is a "box checking" exercise, where so
long as the steps are performed in the correct sequence to the
expected degree, the auditor can step away from the engagement
safely without concern over the future outcome of the entity being
audited.
To change this, the article speaks of the need for internal motivation
of the auditing profession to break from the incentives pushing
against more accountability and seek evaluation of auditor
performance based on a rigorous failure study. Driving change from
the profession and using the process of gathering, collecting, and
utilizing data to inform federal policy to see greater levels of
transparency and accountability in the auditing process. I think this is
a noble objective, but in practice, difficult to obtain.
