Windy Atmawardani Rachman (21207174)
SMAK01-7
Auditing 2
1. What are three common pitfalls that should be avoided during brainstorming sessions? How can these problems be avoided?
Answer :
There are some common pitfalls that should be avoided during brainstorming sessions, such as Group domination, Social loafing, Groupthink and Groupshift.
- Group domination is one of the most corrosive problems. Because the goal of a brainstorming session is to have audit team members share thoughts and ideas, one or two participants dominating the process can quickly squelch the creative energies of the group as a whole, reducing the likelihood the team will identify any actual fraud risks.
- Social loafing, also called free-riding, is another potential pitfall of brainstorming activities. It occurs when participants disengage from the process, expecting that other team members will pick up the slack. Given their size and geographic dispersion, large audit teams may be particularly susceptible.
- Groupthink is another pitfall to avoid. This phenomenon occurs when team members become so concerned with reaching consensus that they fail to realistically evaluate all ideas or suggestions. Audit teams can be particularly susceptible to this as auditors generally are very sensitive to time/budget pressures.
- Groupshift is the fourth pitfall. While a purpose of brainstorming sessions is to help the audit team collectively arrive at conclusions about fraud risks, team leaders must exercise caution to avoid allowing the team to take an extreme position on fraud risk. With the recent emphasis on fraud detection, there is some cause for concern audit teams will assume the risks are high in all engagements.
These problems can be avoided by following the guidelines, such as :
- · Assign homework
The discussion leader should inform participants well in advance of a scheduled meeting that they will discuss fraud risks so each team member can focus on coming up with ideas about how and where the entity is susceptible. Distributing the meeting’s agenda will also provide greater context for participants to think about possible fraud risks and will further inform them about what to expect during the brainstorming session but a small firm not need to circulate an agenda before a brainstorming session because it has agreed upon a common agenda to be used across all engagements. The leader should encourage team members to use the experiences and knowledge obtained during previous audits and recent interactions with the client. Also, he or she should stress that the assignment should not be overly time-consuming; members can be formulating ideas as they perform their day-to-day tasks.
- · Establish ground rules
The leader should establish a strong foundation for brainstorming sessions by communicating fundamental ground rules before a session begins: Do not criticize others’ ideas, let each person speak, and try to build on others’ ideas. Audit team members should know what to expect of themselves and others. It is particularly important that all participants feel their input is valued and their voice will be heard. The leader also should make certain that participants understand how the session will proceed and how ideas generated during the meeting will impact the audit.
- · Set the tone
The leader should genuinely encourage all audit team members, including less experienced staff, to express any idea no matter how unusual it may seem. Because not everyone enters the brainstorming activity with a similar level of knowledge or experience with the client or willingness to share ideas about fraud risk in an open-ended fashion. Emphasizing that every idea is valued and everyone has something to contribute to the discussion. Demonstrated genuine involvement by the engagement leader will go a long way towards setting the stage for all team members to engage in the activity.
- · Take a “zero tolerance” stance on criticism
The leader must make it clear that no criticism about any issue presented will be allowed while the group is generating ideas about fraud risks. Any perception of criticism can quickly shut down a team member’s willingness to participate. Criticism also may negatively affect the efficiency of the brainstorming activity by diverting attention from the risk assessment process to other subjects. With a “zero tolerance for criticism” expectation, the team is less likely to fall prey to the pitfalls noted. Open-mindedness, not conformity, should be the meeting’s goal.
- · Encourage more not less
Participants should make every effort to generate as many ideas as possible about how and where the entity may be susceptible to fraud and how management might conceal its actions. The greater the number of ideas about potential fraud risks, the more likely the group will accurately identify and assess relevant fraud risks and develop appropriate audit responses to them. Reframing issues from different perspectives can be a valuable technique for increasing the number of ideas generated about a particular fraud risk.
- · Credit the group, not individuals
It is important for the leader to assign credit for ideas generated to the group as a whole rather than to a contributing member. Recognizing group ownership of ideas is more likely to increase the team’s interest and its commitment to its goals than when individuals are rewarded personally.
- · Manage group size and composition
Team leaders must not only include the ones who will be key to the discussion at hand, but also understand how group size might affect the outcomes. Thus, the number of people participating in sessions may vary across an engagement. The size of the group affects the structure of the session: Smaller groups (seven or fewer individuals) tend to complete tasks more quickly and reduce the potential for group domination or social loafing; larger groups (twelve or more individuals). For some very large engagements, the leader to divide the engagement team into subgroups, perhaps along the client’s business segments, for detailed brainstorming about fraud risks in those segments. Later, representatives from each subgroup can convene to discuss the risks identified at the segment level and to brainstorm about consolidated risks.
2. What are three important techniques to improve the effectiveness of a brainstorming session?
Answer :
There are three important techniques to improve the effectiveness of brainstorming session, such as Open brainstorming, Round-robin brainstorming, and Electronic brainstorming.
- · Open brainstorming
An unstructured technique auditors can use in which discussions follow very few rules and procedures. In this type of brainstorming, individuals share ideas as they come to mind in a kind of free-for-all. If audit teams decide to use this approach, it is best to have someone not participating in the brainstorming session record ideas. This might be a new staff person on the engagement who has little knowledge about the client’s business and environment and who will benefit by better understanding.
- · Round-robin brainstorming
A structured technique characterized by a session that begins with a period of no talking during which team members engage in silent “self-brainstorming,” or “brainwriting,” to form their ideas. The team, informed of the issues, assigned homework well in advance of the meeting and knowing they have to make a list of their ideas in priority order, will be more responsive to sharing with the group. After the brainwriting phase, each individual presents his or her ideas. One way to do this is to have members post their lists on a wall or bulletin board for all to see. This can be particularly useful if people are reluctant to speak up. And, it is efficient since all participants share in the process. Beside that Round-robin brainstorming also to eliminates the problem of group domination because each team member has a turn, participation is equal and otherwise quiet individuals have a chance to speak.
- · Electronic brainstorming
An increasingly popular technique that combines open brainstorming with software technology. Team members are told well before they gather, either in one room or from remote locations via an electronic link, to think about potential fraud risks. Electronic brainstorming begins when a participant or session leader presents an idea about a potential fraud risk to the group. In contrast to round-robin brainstorming, team members can share ideas as they come to mind. There is no need to wait for a turn to “speak” because the technology eliminates the problem of “talking over one another.” Specifically, participants silently share ideas by typing them into a computer, which quickly displays them on everyone’s monitor or a projection screen. Some technologies also provide participants with periodic feedback about the number and types of ideas to help reduce the likelihood of social loafing due to the anonymous and silent nature of this technique. Idea generation continues until the group has exhausted all of its ideas. Then the brainstorming software assists the team with the discussion and consolidation of its ideas. Electronic brainstorming generally shortens meeting times, increases idea generation and reduces the possibility of personalizing ideas because an idea’s author remains anonymous. Group size ceases to be a limiting factor as well. Current technology eliminates many coordination and communication problems, allowing reasonably large groups to have virtual meetings in which participants may or may not be in the same location as long as there is access to the appropriate software. So, this technique may be a tool for large, multinational client engagements where audit team members are globally dispersed.
Source :
http://www.journalofaccountancy.com/Issues/2003/Dec/APrimerForBrainstormingFraudRisks.htm
