Unmasking the Too-Good-to-Be-True: Cultivating a Questioning Mind to Battle Bias in Auditing

Ever see a “limited time offer” for the latest gadget at 90% off and think, “Is this for real?” That’s your questioning mind kicking in. In auditing, that kind of skepticism isn’t just helpful—it’s essential for avoiding costly mistakes and unearthing hidden issues. A questioning mind doesn’t take things at face value; it probes, it digs, and it asks tough questions that get to the heart of the truth.

In fact, a questioning mind is so critical that it’s recognized as the first of six fundamental characteristics of professional skepticism as highlighted by the Global Public Policy Committee (GPPC). The IIA’s recent publication, Recognizing and Combating Cognitive Bias in Auditing, explores how crucial this skill is, reminding us that cognitive bias can sneak into data, reports, and even our own assessments. Cultivating a questioning mind is something every auditor can achieve—if we make it a conscious habit.

The Questioning Mind: The Foundation of Professional Skepticism

A questioning mind is all about scrutinizing what’s presented, moving past first impressions, and not shying away from challenging assumptions. It’s the opposite of rubber-stamping; it’s a process of turning on our analytical radar to catch inconsistencies, potential risks, and misleading conclusions. This mindset is invaluable in auditing, where assumptions can lead to significant errors.

With a questioning mind, auditors move beyond just “gut feelings” to seek concrete evidence. It’s a skill that, with conscious focus, becomes second nature, helping us to avoid being misled by surface-level information or falling prey to common biases.

Example #1: Spotting Weak Internal Controls with a Questioning Mind

Picture this: You’re auditing a retail client who proudly insists they have “rock-solid” controls in place for their purchase orders. Supposedly, any order over a certain amount must go through a secondary approval process to prevent unauthorized spending. Sounds good, right?

But your questioning mind isn’t convinced. You start digging and ask for recent examples of high-value orders to verify the process. What you find is startling: several large orders have slipped through without that secondary approval. After some tough questions, you uncover that this “secondary review” process was only occasionally applied, especially during peak periods. Because you chose to look deeper, your client can tighten these controls and avoid future financial risk.

Without that questioning mindset, this weak link in internal controls could have gone unnoticed, potentially leading to overspending or unauthorized purchases.

Example #2: Spotting the “Too-Good-to-Be-True” Numbers

Now let’s look at numbers. Imagine you’re reviewing revenue figures for a manufacturing client. Everything lines up beautifully with last year’s figures—almost too beautifully. Instead of breezing past it, your questioning mind prompts you to ask, “Why is there no fluctuation? What’s keeping these numbers so stable?”

With a bit of extra probing, you discover that the revenue forecasts were based on aggressive assumptions about market growth that aren’t holding up in the current year. By digging deeper, you help the client adjust projections and avoid overconfident budgeting. Without a questioning mindset, misleading figures might have gone unquestioned, risking reputational harm and operational disruption for the client.

Cultivating a Questioning Mind: A Learnable Skill

The good news? Cultivating a questioning mind is not something only a few auditors are born with—it’s a skill you can develop with practice. The IIA’s publication emphasizes that by being intentional about asking questions, probing deeper, and challenging the obvious, any auditor can strengthen their professional skepticism. Each time we approach information critically and seek to verify it from different angles, we’re practicing and growing this skill.

Why a Questioning Mind Matters

In auditing, a questioning mind doesn’t just help us avoid costly mistakes; it strengthens trust with clients, colleagues, and stakeholders. By refusing to take things at face value, we build a culture of reliability and accountability. So, next time something seems “just fine,” take a closer look. Challenge it, test it, and dig deeper.

Assume nothing, verify everything. That’s the mantra for cultivating professional skepticism and making sure your audits are both thorough and trustworthy. A questioning mind isn’t just a nice-to-have—it’s essential for a top-notch auditor.

Embracing Professional Skepticism: A Series to Build a Skeptical Mindset

To help make this essential concept more relatable, I’ve launched a series of short videos that break down professional skepticism into bite-sized pieces (don’t worry, no jargon overload!). As auditors, we need to elevate our human skills to tackle the complexity and biases in our work.

The third video in the series, "A Questioning Mind", explores this fundamental characteristic of professional skepticism. It isn’t just about doubting; it’s about digging deeper, challenging assumptions, and looking beyond the surface. If something seems too good to be true, chances are it is. Learn how to harness your skepticism, identify hidden biases, and ask the tough questions that help you see things clearly.

Understanding cognitive bias is one side of the coin in the quest towards professional skepticism. Join me in building a skeptical mindset that’s not only helpful but essential for high-quality audits. It’s time to make professional skepticism something we can all master and, dare I say, enjoy! Stay tuned for the series.

View all videos in this series here.

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Practical Tips: “Daily Habits to Strengthen Your Professional Skepticism – PAUSE and Think Slow”

In auditing, cultivating professional skepticism requires us to slow down our thinking, recognize biases, and approach each situation with curiosity rather than assumption. Inspired by Howard J. Ross’s framework in Everyday Bias (2014), here’s a PAUSE approach to develop a questioning mind:

P – Pay Attention

• Tip: Begin by paying close attention to the difference between what’s happening in a situation and how you’re interpreting it. For instance, if a report shows “perfectly consistent” numbers, separate the event (the report) from your interpretation (that everything must be in order). Notice where initial judgments may be sneaking in.

A – Acknowledge

• Tip: Identify your immediate reaction, judgment, or assumption. For example, ask yourself, “Am I assuming these controls are effective just because they’re well-documented?” Acknowledging your assumptions helps to catch biases before they influence your decisions.

U – Understand

• Tip: Consider alternative interpretations. Could others see this data differently? What might an outsider’s perspective reveal? Understanding different viewpoints ensures you’re not anchored to one interpretation and helps you uncover potentially overlooked risks.

S – Search

• Tip: Look for the most constructive and productive way to approach the situation. Instead of simply confirming your initial reaction, consider questions that would lead to a balanced perspective. For example, “What evidence would I need to feel confident in this control’s reliability?”

E – Execute

• Tip: Take action in a way that aligns with your goal of objective, skeptical evaluation. Consistently apply this process throughout your audit, documenting how you’ve challenged assumptions and verified information.

By practicing this PAUSE approach, you’re training your mind to challenge cognitive biases, avoid snap judgments, and engage in the deeper level of critical thinking essential for effective auditing.

Upcoming Event: Roundtable Discussion on “Impact of Cognitive Bias on Audit Quality” at the Great Indian Audit Leader Summit and Awards 2024

Event: Roundtable Discussion on “Impact of Cognitive Bias on Audit Quality” Date: 21 November 2024 Location: Ginger Mumbai Airport, Great Indian Audit Leader Summit and Awards 2024 Moderators: Bhavani Jois, Founder and Executive Coach, The Evolving Way, and Nagesh Pinge, Seasoned Audit Leader and Independent Director

Join us for an engaging roundtable discussion where we’ll explore the critical role cognitive bias plays in shaping audit quality. Together with Nagesh, I’ll be diving into the biases that often creep into internal audits, compromising objectivity and affecting decision-making.

Roundtable Synopsis

Topic: Impact of Cognitive Bias on Audit Quality

Subtopic: Exploring the Most Prevalent Cognitive Biases that Affect Internal Auditors

Brief: We’ll discuss how biases like confirmation bias, anchoring, and the availability heuristic can lead to errors in judgment, missed risks, and ultimately compromised audit conclusions. Attendees will have the chance to share their experiences, learn from peers, and gain insights into strategies for managing biases in their audits.

Why Attend?

This roundtable offers a rare opportunity to collaborate with other audit leaders, confront cognitive biases, and gain practical strategies for strengthening audit quality. Whether you’re a seasoned auditor or new to the field, this discussion promises actionable insights and a chance to network with top professionals in auditing.

Reserve your spot at the Great Indian Audit Leader Summit and Awards 2024 to ensure you don’t miss this thought-provoking session on November 21!

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Empowering audit, risk, and compliance professionals to elevate their human skills and unlock their full potential. Each edition delivers thought-provoking insights on topics such as cognitive bias, critical thinking, active listening, professional skepticism, powerful questioning, mindset mastery, mental fitness, trust-based relationships, and effective communication. From understanding yourself and others to presenting with impact and writing compelling reports, this newsletter equips you with the tools to thrive professionally and personally. Subscribe to start evolving and transforming your career.

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About Me

I am Bhavani Jois, a passionate leader and coach who has successfully pivoted after a 25 year career in governance, risk, and audit.?My journey from auditor to coach has been shaped by resilience, curiosity, and a deep belief in the transformative power of coaching.

During the pandemic, I reignited my passion for coaching, leading me to fully embrace my calling and establish The Evolving Way and The Evolving Auditor.

I’m dedicated to helping individuals and teams unlock their potential, achieve lasting growth and find fulfilment in their professional and personal lives.

Join me on this journey of transformation and empowerment!