Effective interviewing skills for auditors.
Auditors spend considerable time interviewing client personnel. Yet most auditors have received little formal training in how to conduct an effective audit interview. This month, Thomas R. Craig, PhD, CPA, associate professor of accounting at Illinois State University in Normal, Illinois, discusses some of the established principles of interviewing and how to plan and conduct an effective audit interview.
An audit interview is an evidence gathering procedure-a method of obtaining evidence by asking questions, listening to and evaluating the responses and then asking appropriate follow-up questions. As a class of evidence-gathering procedures, audit interviews are one of the most effective and efficient available to the auditor.
TYPES OF QUESTIONS
Professional interviewers know that a question's phrasing can significantly influence the response. The question "We don't have a major inventory obsolescence problem, do we?" is biased, and will produce an entirely different response than the neutrally phrased question, "How does the company identify potentially obsolete inventory items?" Interview questions can be classified in two ways: (1) whether the question is open-ended or closed, and (2) whether the question is biased or unbiased; see exhibit 1, page 122.
Open and closed questions. The openness of a question affects the likely range of responses. Open questions allow the interviewee to determine the range and scope of his or her response and to express it in his own terms. Closed questions restrict the range of the interviewee's response, frequently to either yes or no.
At first, some may conclude an auditor should always ask open questions. However, each form of question has its particular strengths and is appropriate in different circumstances. Open questions provide greater information to the interviewer, but they also extend the length of the interview, require greater interviewing expertise and are not appropriate when the auditor requires specific representations on an issue.
Closed questions permit the interviewer to obtain considerable information in a shorter period of time, especially if the questions are asked as part of a checklist (for example, an internal control checklist). However, closed questions restrict the amount of information gain to those areas already known by the interviewer and they don't deal with "why" questions.
An auditor may appropriately use both forms of questions in an interview. For example, an auditor may begin an interview with, "How was the allowance for uncollectibles estimated?" open question) and conclude with, "Has the account been estimated using the same methods as last year?" (a closed question).
Biased and unbiased questions. The bias of a question affects the validity of the responses. The auditor's objective in conducting an interview is to obtain valid, relevant evidentiary matter. Biased questions (especially so-called loaded questions) produce neither valid nor relevant evidence. For example, the question "The allowance for uncollectibles is fairly stated in all material respects, wouldn't you say?", is a thoroughly biased, loaded question. In addition to being ambiguous (what does the phrase "in all material respects" mean?), the question contains obvious cues as to the answer the auditor expects. Although it may be true the allowance for uncollectibles is fairly stated, the response is tainted by the question's phrasing, and therefore neither valid nor relevant.
Auditors should recognize that it's very easy for bias to creep into interview questions, and that most people respond unconsciously to cues embedded in them. When conducting interviews, auditors should make deliberate, conscious attempts to phrase all questions in an unbiased manner. Indeed, the tendency to ask leading (and hence biased) questions is the most common error auditors make in conducting interviews.
PLANNING THE INTERVIEW
Successful audit interviews begin with planning and preparation. Except for the shortest interview, the auditor normally should prepare a written agenda covering the topics to be discussed. This agenda will assist in asking questions during the interview and, just as important, assist in recalling what was said after the interview. Also, during the preparation process, the auditor should rehearse how particular questions will be phrased and make sure the phrasing does not bias the question. Almost all nonprofessional interviewers tend to ask leading questions, and the auditor must guard against that tendency in order to be an effective interviewer.
Most audit interviews can be classified as primarily involving "obtaining an understanding" or "obtaining an explanation," and an auditor's planning and preparation differs with each type. Interviews primarily seeking understandings (for example, of a process) require familiarity with available background materials, such as client manuals or prior year working papers. Interviews primarily seeking explanations (of an unusual relationship, for example), require consideration of all factors, including the interviewee's likely response to interview questions.
CONDUCTING THE INTERVIEW
The essence of an interview is asking questions in an interactive fashion. The interactive nature of an interview is shown in exhibit 2, below. While the phrasing of questions is extremely important, an auditor's listening and evaluating skills can be just as important. These factors are discussed below.
Listening. The seemingly passive act of listening can actually be an active and complex process. While it may sound simplistic, it's important the auditor actually listen to the interviewee's responses. As he listens, the auditor should consciously attempt to paraphrase what the interviewee is saying. Paraphrasing will assist in subsequently recalling what the interviewee said, and will also temper the natural tendency to listen only for points that are easy to understand, or fit into preconceptions. The auditor should also watch for other cues that will aid in interpreting the information received, e. g., body posture, facial expression, emotion level, etc.
Most client personnel do not object if the auditor takes notes during the interview. However, if notes are taken, the auditor should be aware that this impedes the flow of communication and normally should be restricted to details such as names, dates, quantities, etc. (Inexperienced auditors tend towards excessive note taking and should consciously guard against this.) The auditor should give the interviewee adequate time to think about the question asked, and should not suggest possible answers. Such suggestions can significantly bias the response, since the interviewee may wish to be agreeable, or to appear informed. It's also important to recognize that silence can be an excellent prompter. Most interviewees feel uncomfortable in the presence of silence and will readily provide additional information to fill the void. Evaluating. The interviewer's ability to evaluate information and pose appropriate follow-up questions s important to a good interview. Most follow-up questions involve requests for either elaboration or explanation. Follow-up questions reqesting elaboration are usually easier to pose since they only request more information, such as, "Could you expand on that last point?" Follow-up questions requesting explanation sometimes are more difficult to pose tactfully, especially if the question implies a contradiction in the interviewee's response. Nonetheless, an auditor must probe when necessary, especially when provided with illogical, contradictory or facesaving answers. Inexperienced auditors sometimes overlook the fact they have an important job to do, and the client expects them to ask tough questions.
In evaluating responses, the auditor should learn to distinguish fact from opinion, and be conscious of biases an interviewee may have. For example, a sales manager may be more optimistic about the salability of a potentially obsolete product than the customer-service manager. Also, the auditor should try to get documentary evidence to support important representations made during an interview. A common deficiency identified in peer reviews-and a common theme in many cases involving audit failures-is overreliance on management representations. If no documentary evidence exists for an important representation (because it concerns management's intent), the auditor should include the representation in the management representation letter.
Ending. At the conclusion of the interview, the auditor should summarize the issues discussed with the client. This will help eliminate misunderstandings and help the auditor recall later what was said. In addition, it's usually appropriate at the conclusion of an interview to ask so-called clearinghouse probes on the topic, for example, "Is there anything else we should discuss concerning the allowance for uncollectibles?"
IMPROVED INTERVIEWING SKILLS
Auditors can significantly enhance their interviewing skills through training and practice. The most important point an auditor should remember is that a question's phrasing can significantly influence an interviewee's response, and therefore the validity and relevance of the response as a form of evidentiary matter. Auditors should be mindful of this simple, but often overlooked, fact when planning and conducting audit interviews. 2
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|Author:||Craig, Thomas R.|
|Publication:||Journal of Accountancy|
|Date:||Jul 1, 1991|
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