Knowledge and Skill Requirements for Audits of Fair Values

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Abstract

This study contributes to the auditing educational literature by identifying competencies critical for correct performance of fair value auditing tasks and heuristics and behavioral shortcuts that may need corrective action and that may be addressed in the classroom. Using the audit of goodwill impairment as the exemplar task for identifying fair value auditing competencies, we create a normative process map for this task through an analysis of accounting and auditing standards and verbal protocols of experienced auditors. Next, we use an analysis of verbal protocols of students’ performance of the task and a comparison of those protocols against the normative process map to develop an understanding of weaknesses in how students approach the audit of goodwill/cash generating unit (CGU) impairment under IFRS. These findings lead to recommended curriculum development to address the identified weaknesses that should be of interest to auditing educators and audit firm personnel involved in development of staff training programs.

Authors

• Jefim Boritz, University of Waterloo

• Lev Timoshenko, University of Calgary