Practitioner Summary – Systems Thinking in Complex Audit Situations
Current Issues in Auditing,
October (4th Quarter/Autumn)
In this article, we summarize a series of three recent accounting studies examining a specific form of critical thinking that has been developed and successfully practiced in other disciplines, like engineering and nursing, for years. First, How a Systems Perspective Improves Knowledge Acquisition and Performance in Analytical Procedures (Brewster, 2011) introduces a comprehensive systems-thinking training exercise. The researcher administers the training to accounting students and measures changes in their ability to recognize when management has provided information inconsistent with third-party information, a skill necessary in performing analytical procedures. Next, The Effect of Client Lies on Auditor Memory Resistance and False Memory Acceptance (Brewster, 2016) uses a case study based on a slightly modified version of the original training materials. The materials are administered to practicing auditors to evaluate whether introducing company information in a systems-thinking format (as opposed to a linear process format) affects their ability to recognize when management is providing misinformation. Auditors in this study are also performing analytical procedures tasks. Finally, Enhancing Auditors’ Critical Thinking in Audits of Complex Estimates (Bucaro, 2018) further modifies and simplifies the original training materials and administers them as “pointers” to help participants, audit professionals, “understand the components of a client system and how they interact”. The pointers represent continual on-the-job training and/or decision aids, which theory suggests will build systems-thinking skills over time. The study also extends this line of research outside of analytical procedures and into later-stage audit judgments.