Still working out the Risk Assessment SASs

I am home from a trip that included visiting two CPA firms in the southeast.  At both, we talked about risk assessment and how to plan an audit - yellow book style.  We looked at the tools they were using to comply with the risk assessment SASs. I presented a technique that would help them stop using the shot-gun approach to auditing (you know - throw as many methodologies on a subject as possible) and they liked it. 

Problem is - their tools aren't flexible enough to pull it off. The PPC e-tool went way overboard - throwing 30 methodologies at simple questions!  I was amazed at how much work it recommended.  Of course, the auditor was supposed to cut back on these suggested methodologies using their judgment - but unseasoned auditors (sounds like I"m talking about a frying pan!) were scared to cut anything out.  Even seasoned auditors were reluctant. 

The McGladry tool was a little more flexible - but required - as the PPC tool did - way too much work on the front end. I must say - I appreciated how the McGladry tool didn't just throw 30 methodologies at you - but asked you to build a relant program from a list of possibilities.  That at least discouraged the auditors from throwing every possible methodology at the problem.

But both are throwing you a buffet when all you want is a sandwich.  Most auditors I encounter love a good checklist and don't want to be left to their own devices and brain.  I can appreciate the comfort that comes from using a checklist.  But, the creators of the checklists and tools overdo.  Way overdo. 

One of the key pieces missing from the approach is a clear audit objective.  The yellowbook encourages objectives - the AICPA doesn't.  And given a clear, finite objective - you will end up with a minimum of targeted - dart like methodologies.  Not a dozen methodologies - where maybe ONE hits the target. 

If you have a tool you like for risk assessment, please share it with me.  I'd love to see a lazy - get that potato salad off my plate! - approach to risk assessment.

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Governmental auditors unite! Leita Hart-Fanta, CPA, CGFM, and CGAP is the author of “The Yellow Book Interpreted” and owner of Yellowbook-CPE.com a website devoted to training for governmental auditors. Whether you are an internal auditor or monitor for a government entity or a CPA doing grant audits, you will enjoy Leita’s humorous take on the complexity of auditing in the government environment.

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