There has been an issue with auditing. Internally in an audit firm the focus has moved in the last 5-8 years almost entirely to compliance.
It is MUCH MUCH more important that you document everything per the insane number of checklists with sometimes wildly overboard list of requirements than actually look (or have time) to find errors. Actually finding a problem, actual accuracy of audits is no longer emphasized.
As a result, staff go into drudge mode on all sides, some of the work is boilerplate wasted effort, so folks on all sides can get into a lets get through this mentality rather than a lets look into this mentality.
This is in part because one stick here, a review process / PCAOB inspection process is HIGHLY focused on the documentation / checklist part of things. No credit is given for actually finding problems at clients, but LOTS of demerits if everything is not in exact documentation format it needs to be.
Seriously, the PCAOB calls things "audit failures" when something like the work around an item wasn't properly documented in their view EVEN THOUGH the actual numbers were accurate. So auditor signed off on right number, and that is a "failure"
That's a change from past, if numbers were wrong and they had been signed off on, THAT was an "audit failure".
But now, as long as you have followed the steps and checked the boxes, then even IF you miss something, that's OK, because it's "reasonable" not absolute assurance and there is a note that a "well performed" audit may still miss things. Well performed has been interpreted to mean huge amounts of documentation.
This matters legally too - the payouts on these failures may be surprisingly small.
So doing gobs of paperwork is of great importance, and there is little reward left in terms of actually finding problems both by PCAOB and because that can ruffle feathers at client that hired you. So every incentive is for massive amounts of somewhat thoughtless documentation and less substance.
Solutions.
- Name audit partner on report - the fact this isn't done is ridiculous.
- The auditors could be hired by the people who use the audit if possible.
- Get rid of a LOT of boilerplate, it kills staff motivation - folks just go intro drudge / checkbox mode.
- Then add some randomized forensic level rather than checkbox level work, with deep deep checks that staff might enjoy doing and feel like they were really looking for stuff rather than just "papering" the audit.
- Focus on RESULTS. Did auditors sign off on numbers that were right or wrong. That should be entire focus of auditing. Reward folks who find errors. Literally, have a pool of funds for auditors who find the biggest misstatements.
- Include list of auditor proposed adjusting entries to client financials in audit report. Again, focus on the actual results / quality of client / auditor work.
One can dream :)