Is Calibration of Auditors Ever Possible?

Critical aspects of an audit
If I ask you the question: “What are the critical aspects of an audit?”, what would be your answer? According to my opinion, the top three critical aspects of an audit are being:

• An independent assessment of the organization against defined requirements
• A fact-based evaluation of the risks that the organization is exposed to
• Consistent judgement throughout the entire organization to ensure objectivity

All three are linked and compliment to each other, and audit organizations spend an important amount of time and effort to ensure these aspects are met. Is this an easy task? Not really. Particularly consistency is a nuisance and a challenge for most audit organizations. It is true that they receive claims about the inconsistent approach from the auditors every now and then. Consistency is the quality of achieving a level of performance which does not vary greatly in quality over time and location. In other words, auditees are after fair, reliable and repeatable results across the audit universe.

Is auditing exclusively objective?

Auditing is a profession which always contains a certain level of subjectivity or inconsistency as in the case of all others with judgmental uncertainties. Audit professionals not only look for hard evidence i.e. review on documentation, plans, records, logbooks, but also assess through the interviews to get some soft evidence supporting their overall judgement.

One important root cause of the subjectivity or inconsistency is due to the nature of the audit itself. All assessments are planned and performed based on random sampling, and auditors are making the final call based on what they observe out of these selected items. Can we talk about a minimum level of inconsistency accepted during the audit? Well, no I am afraid. Then the question is whether it is possible to ensure consistency and more importantly how it is obtained.

Most audit organizations are trying to calibrate auditors to minimize subjectivity and maximize consistency. Some develop calibration exercises and take the auditors through those on a routine basis. Some use seasoned professionals to coach relatively less experienced ones through the shadowed audits. Some introduce a process to review and approve the audit reports before the closing meeting. And quite some use a mixed approach. All these efforts are invaluable and help to have some level of consistency over the results. But is calibration ever possible?

Where to start to calibrate?

Consistency is an incredibly important power when it is about audit process and result. Audit organizations are taking this very close to their hearts, as it is sad to see all other efforts being wasted due to inconsistencies observed during an audit. It also has a huge impact on perceived value of the audit organization. So, what could be the check points to ensure a high level of consistency, beyond all efforts on calibration?

1. Standards

Auditing is an assessment on organization’s performance against certain set of standards and requirements. An auditor can only perform to a level of quality at which the standards are written. If you observe the situations when the discussions, pressure and stress are high, in often cases you will see that the requirements are not clear. Standards and requirements written vague will result in higher subjectivity, hence inconsistency. Watch your company standards. Make them crystal clear for every single person in its domain.

2. Auditing Tools

Audit professionals use customized auditing tools (agenda templates, checklists, report templates) both to support their assessment and to help stay consistent. As in the case of standards, the quality and completeness of the auditing tools define the quality of the audit and its result. Do you have the templates as needed? Are they clear enough for all users? Are they user friendly or creating an additional workload for auditors? Do they reflect the latest standards and requirements? Make sure the auditing tools provide the right frame to auditors to perform at their best.

3. Auditor Capability

Perfect standards and super-efficient auditing tools will require an equally capable auditor for the desired results. Auditors with the right technical and operational background, well-trained on standards and the use of auditing tools, coached and mentored enough by experienced auditors will spark off the way to the audits with high consistency. Is technical capability enough? Technically seasoned auditors equipped with the right non-technical skills will create the real difference. Audit organizations should ensure that the auditors can put things into the right perspective, understand very well the risks and their implications for the business while managing the conflicting situations with ease. Observe your auditor capabilities. Make sure that they are competent and confident.

4. Organizational Culture

Auditing is one of the most stressful processes within the business environment. Clarity on standards, efficient tools and capable auditors are helping to a great deal to release the tension created. Would it be enough? We must remember that every audit has two sides: the auditing function and the organization being audited. The way the organization perceives the audit has a huge impact on the audit efficiency and consistency.

Audits when seen as torture, there are endless discussions and tones of stress which will make both sides daunted. This will compromise the quality and the consistency of the audit as too much time and effort will be spent on unnecessary long debates and discussions leaving people drained.

I picture the auditing process as a pyramid in my imagination. One leg is the standards, second one is the tools and the third is the auditors. Organizational culture is the platform holding this 3-leg structure standing. Organizations should be nurturing a culture where audits are perceived as aids for continuous improvement while protecting the assets of the company, including people.

I see a great value in all efforts for calibrating auditors and encourage audit functions to continue doing so. But remember, all will be wasted unless this pyramid is sound and solid.

By Tülay Kahraman
September 10, 2020

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