Increasing Audit Profits Series No. 16—Minimizing the Size and Number of Practice Aids | AccountingWEB

Increasing Audit Profits Series No. 16—Minimizing the Size and Number of Practice Aids

Once upon a time, it was easy to achieve audit quality.  Purchasing a set of practice aids from a major publisher, completing all the requirements of the forms, checklists and programs, and preparing working papers for every trial balance account was the way it was done.  This approach took a lot of time but it made the cheeks of “warm-glow” auditors turn pink!  This “don’t worry, be happy” strategy enabled some of us to sleep at night!

Then along came the “expectation gap” standards of the mid-1980s.  These standards injected a concept called “professional judgment” into our audit approaches.  Basing audit approaches on worst-case risk scenarios, we learned, didn’t always qualify as professional judgment.  Can you believe we actually had to begin identifying risks during planning and tailoring audit programs based on those risks?

This made many auditors uncomfortable.  Not understanding which procedures to add or delete in applying professional judgment based on assessed levels of risk, we continued to default to high risk and perform all procedures on all purchased practice aids.

Twenty years passed and new risk assessment standards became effective.  Audit strategies now must be designed based on assessed levels of risk of material misstatement at the assertion (account classification) level.  Even more professional judgment is required!  High risk should result in more audit work; low risk requires less audit work.

We get the high risk part but doing less work when risk is low causes us to grab the edge of our desks and squeeze until our knuckles turn white!  We still fear missing an error or fraud so we continue doing everything!  This is not professional judgment!

So what’s an auditor to do? An old playwright, G.K. Chesterton I believe, once said, “The best way out is through.”  So it is for today’s auditor.  Going “through” to professional judgment on audits includes these steps:

1.    Know the requirements of the professional standards.  We must know what the requirements are so we can do the minimum!
2.    Plan unique audit strategies on each engagement for each client.  Use professional risk-based judgments to determine the minimum substantive evidence necessary to evaluate financial statement assertions.
3.    Decide upon the most cost-beneficial evidence collection methods and audit documentation possible in each engagement’s circumstances.  

These steps will result in compliance with the requirements of current and new redrafted risk assessment standards.  The auditor’s professional judgment will ensure both quality and profitability on every engagement!

Two live or on-demand webcasts in my Small Audit Series, “Using Only Key Forms” and “Just Enough Working Papers” cover these subjects in greater detail.  You can download syllabuses and register by clicking the applicable box on my home page,

This blog

by Larry Perry, CPA, CPA Firm Support Services, LLC - Larry has over 40 years experience as a CPA practitioner, author of accounting and auditing manuals, author and presenter of live staff training seminars and author of webcast and self-study CPE programs.  He is co-founder of CPA Firm Support Services, LLC (, an organization providing resources, training and consulting to smaller CPA firms.  Larry writes a weekly blog on focusing on small audits, reviews and compilations.  He is currently developing documentation manuals and handbooks for small audits, reviews and compilations and related electronic practice aids.

More from this blog

Bloggers crew

Steve Knowles has spent 25 years in business and practice in the UK, but he also worked in the states and the years haven't dulled his way of seeing an alternative view to everyone else, and every day is a new adventure.


Joel M. Ungar, CPA is a lifelong resident of the Detroit area and a graduate of The University of Michigan. He is a principal with Silberstein Ungar, PLLC, a Top 15 auditor of SEC public reporting companies.


Allan Boress, CPA, with over 25 years as a practitioner and consultant to the accounting profession. Mr. Boress is the author of 12 published books in 6 different languages, including a best-seller, The "I-Hate-Selling" Book.


Larry Perry, CPA, CPA Firm Support Services, LLC, is the author of accounting and auditing manuals, author and presenter of live staff training seminars, and author of webcast and self-study CPE programs. He blogs about small audits, reviews, and compilations.

Sandra Wiley, COO and Shareholder, is ranked by Accounting Today as one of the 100 Most Influential People in Accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. She is also a founding member of The CPA Consultant's Alliance. Sandra is a certified Kolbe™ trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.

Maria Calabrese, CIR, Human Resources manager for Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC in Cranford, New Jersey, Maria's topics revolve around the world of: Mentoring, Performance management, and The "Y Generation," a.k.a. "The whY generation".


William Brighenti is a CPA, Certified QuickBooks ProAdvisor, and Certified [Business] Valuation Analyst, operating an accounting, tax, and QuickBooks consulting firm in Hartford, Connecticut, Accountants CPA Hartford.


Ken Garen, CPA, is the co-founder and President of Universal Business Computing Company (, a software development firm of high-volume, high-productivity accounting and payroll technology.


Eva Rosenberg, MBA, EA, is the publisher of, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.


Amy Vetter, CPA, CITP is the CPA Programs Leader for Intacct Corporation responsible for leading the CPA/BPO Partners nationally.

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State tax Notes entitled, "The SALT Effect." For more info, visit his website:
Scott H. Cytron, ABC, is president of Cytron and Company, known for helping companies and organizations improve their bottom line through a hybrid of strategic public relations, communications, marketing programs and top-notch client service. An accredited consultant, Scott works with companies, organizations and individuals in professional services (accounting, finance, medical, legal, engineering), high-tech and B2B/B2C product/service sales.

Rita Keller is a nationally known CPA firm management consultant, speaker, author, mentor and blogger. She has over 30 years hands-on experience in CPA firm management, marketing, technology and administrative operations.

Stacy Kildal is the mom of two fantastic kids, an Advanced Certified QuickBooks ProAdvisor, Certified Enterprise Solutions ProAdvisor, Sleeter Group Certified Consultant, a nationally recognized member of the Intuit Trainer and Writer Network, and co-host of RadioFree QuickBooks.
Michael Alter's blog specializes in providing practical advice to those who seek greater profitability and practice management tactics that enhance deeper client relationships.

Sally Glick, CMO, Principal, Marketer of the Year in 2003 and AAM Hall of Famer in 2007, leads a lively discussion of the constantly expanding roles of marketing and the professional marketers that drive this initiative in accounting firms of all sizes.


The IMA Young Professionals Blog features the insights of IMA’s Young Professionals Committee. Committee members share advice and experiences on careers, continuing education, work/life balance, and other issues affecting young accounting and finance professionals.


FEI Financial Reporting Blog provides highlights from SEC, PCAOB, FASB, IASB, and other regulatory news, including reporting under Sarbanes-Oxley Sect 404. It is written by Edith Orenstein, Director of Technical Policy Analysis at FEI.


Sue Anderson has 30 years of experience in continuing education for accountants. Currently she is the program director for online CPE provider CPE Link.


Jim Fahey is COO of Apple Growth Partners, a regional CPA firm in Ohio. His focus is on the effective and efficient use of technology within the firm by all team members.

Caleb Newquist is the Editor-in-Chief of Sift Media US, overseeing content for both AccountingWEB and Going Concern.

Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of "The Yellow Book Interpreted" and owner of a website devoted to training for governmental auditors.


AccountingWEB is more than just a U.S. team of journalists and financial and technology experts - we have an international side, too! Members of our British team who publish share their ideas, insights, and perspectives from across the pond.