The theme of this issue of the Local Government Auditing Quarterly is the art and science of auditing. With that theme in mind, I first asked myself, "Which is it? Is auditing an art or a science?" Being from West Virginia, I had to pull out my dictionary to figure this one out.

Per Webster's New Collegiate Dictionary, the noun audit is defined as "a) a formal or official examination and verification of an account book, or b) a methodical examination and review." Webster defines art as "skill acquired by experience, study, or observation." Science is defined as, "knowledge attained through study or practice of something (as a sport or technique) that may be studied or learned like systematized knowledge."

To perform an examination and verification of an account book or to perform a methodical examination and review, an auditor would need to apply skills acquired by experience, study, or observation, which would lead me to the conclusion that auditing is an art. However, auditing also calls upon the auditor to apply knowledge he/she attained through study or practice. We auditors always discuss audit techniques, which leads me to the conclusion that auditing is a science. Hence, I believe it is appropriate to conclude that auditing really is an art and a science; it requires both skill and knowledge. Whether you consider yourself to be an artist or a scientist may depend on the role¹ that you are playing in your organization. Let's consider some of the options.

Classical Auditor

For those of us who have been in the auditing profession for more than 15 years and have more of the traditional financial background, we have probably known many auditors that we would categorize as "Classical Auditors." These individuals have developed great skill and pride in their audit work. Their workpapers are a work of art. A master reference list will tell you exactly where to find the exact audit evidence that you want to examine. The tick marks are all color coded and uniform throughout all of their workpapers. Every sentence in the audit report is cross-referenced to a supporting workpaper, which is also cross-referenced to a specific step in the audit program. The audit standards that they follow are memorized and they have developed various checklists to ensure that their compliance with standards could not be challenged by any peer reviewer.

I perceive the classical auditor as an artist. This auditor has skills that John Q. Public may never appreciate. The attention to detail that this auditor uses in his/her every audit is awe inspiring to many novice auditors. Are you a classical auditor?

Watch Dog

Many government auditors view themselves as a watchdog that is ever vigilant to the possibilities of fraud, waste, and abuse. To help protect their governments, these auditors assess the controls over assets. These auditors are concerned about integrity of processes and people who serve the public. Watchdogs would also be very involved in investigative audits. The watchdog wants to verify that programs are effective and conducted in the most economical and efficient manner. The watchdog may also be seen as the champion for accountability.

I perceive the watchdog to be very skillful. His/her skills have been honed by experience, study and observation. Therefore, I may categorize the watchdog auditor as an artist. However, depending on the subject matter being audited or the specifics of the investigative audit, the auditor may need to call upon his/her knowledge more. Therefore, the watchdog may also be categorized as a scientist. Are you a watchdog?

Change Agent

Many government auditors view themselves as a change agent. They are the champion for organizational improvement. The change agent recognizes that our world is continually evolving. If our governments are going to survive and be effective in a changing world, systems and processes must change to continue to meet the needs of the public. Change agents want to measure if and how well systems are working. If something isn't working, the change agent wants to see it fixed.

I perceive change agents as being very methodical and knowledgeable. They want to measure performance, quantify the impact of decisions, and make things happen, which they have determined are in the best interest of the public. Therefore, I primarily categorize the change agent auditor to be a scientist. However, having observed the skill with which some change agents work, you could also categorize the change agent as an artist. Are you a change agent?

Consultant

The role of the auditor as a consultant is one that is evolving. Standards are changing to recognize this role. The International Standards for the Professional Practice of Internal Auditing (the Red Book), which is promulgated by Institute of Internal Auditors (IIA), specify which standards are intended as general standards, assurance standards, and consulting standards. The IIA recognizes the difference in the work performed related to the assurance that a traditional auditor would provide compared to the consulting services that may also be provided by an auditor.

In the January 2007 revision of Government Auditing Standards (the Yellow Book), GAO discusses consulting under the name of "nonaudit services." Yellow Book Standard 3.26 states, "Nonaudit services in which auditors provide technical advice based on their technical knowledge and expertise do not impair auditor independence with respect to entities they audit...." As an auditor following the Yellow Book, the consultant should be very diligent in defining his role with great care to avoid taking on the role of management. The consultant can make suggestions, but should not make decisions for management.

In the role of a consultant, I perceive the auditor as a scientist. The client wants the consultant's technical knowledge and expertise. Are you a consultant?

The Morphing, Anal, Classical, Watchdog, Change Agent, Consultant

Recognizing that the role each of us plays in our organization changes, I have added a category for the morphing, anal, classical, watchdog, change agent, consultant. Depending on the day, our role may change. While an auditor may come to work with the intent to analyze performance results and recommend changes to improve the organization, he/she may be greeted by a hotline call that uncovers a major fraud that is being perpetrated. At that time, the auditor must morph from the change agent into the watchdog. The auditor will draw upon both his knowledge and his skills to address the duties of the day.

The next question though is "Why Anal?" Do auditors need to be anal? Is being obsessive a good thing or a bad thing? To answer those questions and conclude this article, I'd like to share a family story.

My 17-year-old son works at a local Italian fast food restaurant. While handing out breadsticks, he noticed the City logo on the shirt of a customer in the dining room. To start a conversation, my son stated that his dad works for the City and asked the customer if he knew me. When my son told the customer my name, the customer groaned and then made a few colorful remarks before finishing his dinner. Later that evening, I received a text message from my son asking me, "as an auditor, is being called ‘anal' a good thing or a bad thing?"

Of course, I was intrigued by this question. I called my son to get the details of the conversation from which I determined the identity of the customer. Once I knew who had said it, I told my son, "being called anal is a good thing."

Last quarter, Elizabeth Moore concluded her article on Fraud and Ethics by stating, "We, as auditors, must continue to be the model for high integrity and the owners of public trust for our organizations." As the owners of public trust, it is our duty to hold public servants accountable for producing accurate, reliable, quality work. If holding employees accountable for the work that they produce is considered being anal, then being called anal is a good thing.

Conclusion

Many times we do not want to be labeled. I think we all like seeing ourselves as individuals. However, I think it is good to recognize that we may be perceived differently by others depending on how we label ourselves. Consultants are received differently than many auditors. You may be treated differently depending on whether you portray yourself as a watchdog or a change agent.

Each individual has the opportunity to define himself/herself. That definition may change from time to time. However, knowing what role you want to play within your organization will help you to fulfill that role and achieve the legacy that you want.

Consistency is a good thing, if you are consistently good.

Denny Nester earned his MBA from Purdue University before starting his career as a Controller of a small private firm. He began working in local government auditing in 1992 for the City of Chesapeake, Virginia. He has been the Assistant City Auditor in Colorado Springs, Colorado since 2000. His professional designations include Certified Public Accountant (CPA), Certified Internal Auditor (CIA), and Certified Government Financial Manager (CGFM).

¹ Ronell B. Raaum and Stephen Morgan, Performance Auditing: A Measurement Approach, Chapter 25, "Evolving Roles of Performance Auditors", (The Institute of Internal Auditors Research Foundation, Altamonte Springs, Florida, 2001)

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