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Tax & AccountingAugust 11, 2021

CCH Audit Talks A Deep Dive into Audit Diagnostics with CohnReznick

By: Wolters Kluwer Tax and Accounting

Have you ever thought about the expression “an ounce of prevention is worth a pound of cure” as it applies to auditing? For auditors who use CCH® ProSystem fx® Knowledge Coach risk-based audit software, prevention comes in the form of powerful audit diagnostics.

Mona Dickerson, National Assurance Director for CohnReznick LLP, joined Audit Talks LIVE recently to present a podcast entitled “A Diagnostic Deep Dive.” Mona explained how Knowledge Coach diagnostics have helped CohnReznick gain efficiency, improve compliance with AICPA risk assessment standards, and ultimately, increase audit quality for clients and peer review. 

Keep reading for highlights from the episode, or listen to the entire discussion on Soundcloud.

What are Audit Diagnostics and How are They Developed?

Many auditors think of diagnostics like an engine warning light in the car. Some audit diagnostics function as simple warnings that something is wrong or missing in the audit. For example, Knowledge Coach diagnostics point out places where a sign-off has been missed or answers were left blank in checklists. This is a basic, yet important, check for accuracy and completeness.

But there’s another layer of diagnostics in Knowledge Coach to enhance audit quality. These help auditors assess the quality of their answers and whether or not risks have been linked correctly to substantive procedures. These diagnostics are developed by subject matter experts at Wolters Kluwer who possess deep domain knowledge of audit practices and the applicable standards.

Diagnostics Improve Audit Quality and Compliance

Good audit diagnostics proactively help auditors avoid errors and comply with standards. Auditors can be confident that all procedures are complete, documentation is consistent and risks have been addressed. This leads to better compliance with standards and higher overall audit quality.

"The environment can be overwhelming at times, and it takes years of hands-on working experience to get everything in your audit done perfectly. Add to that the complexity of changes and updates to those requirements. You can easily see how things can fall through the cracks… the diagnostics are going to alert the auditor that something is amiss and requires their attention to fix it.”

— Mona Dickerson, National Assurance Director, CohnReznick LLP

Mona Dickerson has a few favorite Knowledge Coach diagnostics. One is AUD-100, which is the overall tailoring document in Knowledge Coach. It sets the stage for the audit, rolling out diagnostics throughout the audit file, asking pointed questions, and alerting you to forms and documents that need to be added to the file based on compliance guidance.

Another favorite set of Knowledge Coach diagnostics are the risk assessment diagnostics. Peer reviewers carefully scrutinize audit risk assessment, so it is a critical part of compliance. Diagnostics help auditors ensure they have linked procedures to risks. Knowledge Coach risk assessment diagnostics make sure specific risks were identified and auditors have designed and conducted appropriate procedures over those risks. Diagnostics help ensure controls were properly addressed and that procedures were performed for all relevant assertions.

Diagnostics Improve Audit Efficiency

There are several ways the diagnostics in Knowledge Coach increase the efficiency of the audit process. When auditors review their diagnostics, they see links directly to the corresponding cell so they can quickly address each issue. If the tailoring questions reveal that forms are missing, auditors can insert the needed forms directly from the diagnostics, instead of having to leave and come back. If the auditor needs to make changes or add forms as a result of diagnostics, Knowledge Coach then flows those changes throughout the rest of the audit.

“If you’re working on a system that is flat, noninteractive, non-lined and non-intelligent, then making changes in the audit is quite an ordeal. You have to go through all the forms, make sure you change all the answers, make sure everything is linked and that you don’t have contradictory evidence in your own work. It’s a huge struggle…Knowledge Coach takes that change in an answer and flows that all throughout, alerting you to things you forgot to answer because you changed those applicable areas. It is a huge efficiency.”

— Mona Dickerson

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