In the Wake of Numerous Financial and Audit Scandals and the Sarbanes-Oxley

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The Answer is The long list of potential judgment errors and ethical pressures could be disconcerting to auditors if there was no way to offset these limitations on auditor judgment. An audit firm will use its training, support tools, and internal structure to reduce the potential effect ethical dilemmas and judgment biases may have on the audit process. Some of the most common techniques that are used include
i) Improving expertise: One of the most common ways to avoid judgment errors is to rely on highly educated and trained professionals. Audit firms and the accounting profession invest a huge amount of money into training audit professionals.
ii) Training: Training is an especially important element of instilling the firm's ethical values into the conduct of individual auditors and to improve an auditor's judgment process.
iii) Framing and perspective: Changing the way an auditor looks at a decision problem may help alleviate some judgment biases. A particular concern for auditors is to not start the audit thinking that the accounts are fairly stated.
iv) Group decision making and review of individual decisions: Almost all decisions made by auditors in the audit process are made in coordination with other members of the audit team. Group decision making has the benefit of compensating for judgment errors made by individuals.
v) Justification of decisions: Research suggests that individuals are more conscientious and less susceptible to judgment errors when they are asked to justify decisions.
vi) Use of decision aids: Audit firms also develop and use decision aids that direct the gathering and evaluation of evidence in such a way that common judgment errors are avoided.
vii) Consultations with other experts: When an auditor encounters complex or difficult issues in an audit, an expert can be brought in to provide guidance on how to handle the situation.
viii) Internal quality review: Most audit firms have an internal review process whereby specific audit decisions are evaluated with hindsight to see if they meet firm and professional standards.
ix) Rewarding ethical conduct: Audit firms can reduce the likelihood of the auditor giving into client pressure by not basing partner earnings solely on his or her current client fees, not creating incentives for audit partners to sell non-audit services, having a culture that recognizes that there can be good losses of clients, and by rewarding-not punishing-auditors who report their own mistakes or those of others.

In the Wake of Numerous Financial and Audit Scandals and the Sarbanes-Oxley

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