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Quarterly: Fall 2020 - Madison Rorschach & Joshua Oehler

Objectivity and the Auditor: The Perils of Implicit Bias

By Madison Rorschach and Joshua Oehler

The threat of bias affecting our audits is a real challenge. The Yellow Book addresses this threat in its “Conceptual Framework Approach for Independence” (3.30 (c)). While most, if not all of us, will do our best to rid ourselves of explicit bias, we still contend with subtle — but just as impactful — implicit bias. It is important to try to identify these biases so that we can mitigate them and continue to ensure our objectivity as auditors.

Affinity Bias and Implicit Bias

Humans are generally well-intentioned. Few people, especially auditors, go to work and think, “I’m going to exclude people today.” However, we all experience what’s called affinity bias. Affinity bias is the tendency to surround yourself with others who are similar to you. For instance, Texas A&M is known for its “Aggie Network,” so much so that wearing a class ring could get you a job. This preference isn’t necessarily due to any obvious evidence — only a sense of similarity.

Humans often do this unconsciously. Our brain picks up on little details of the person we are interacting with, and we place them in either the “in group” or “out group” – those who are like us and those who aren’t. This unconscious categorization is called implicit bias, and it affects how we think about and treat other people.

But how can this affect our work? And more specifically how can it affect our relationships with auditees?

Examples of Implicit Bias

As auditors, we are professionals who work toward obtaining professional certifications, attend networking events, and typically sit behind a desk all day; however, these characteristics are not always reflective of our auditees.

For example, during an audit of College Station’s Sanitation Division they identified issues with incentivizing cross-training and issued a recommendation. Division officials believed they had a solution, but the HR professionals involved were unwilling to listen to what they had to say. All they saw was that the Division was asking for more money and — without a deep understanding of Sanitation’s function — decided there was no issue. This is partly due to their previous experiences but also due to their unfamiliarity with sanitation jobs. As auditors we are charged with understanding the operations of our auditees, but if subconsciously we don’t value their work, we may be allowing bias to affect our findings.

Aside from understanding the function we are auditing; we should also try to understand the views of all stakeholders who are involved in our audits. In the previous example, both the Sanitation Division and Human Resources had an interest in the recommendation we issued. If we had reached out to HR before making the recommendation, we may have been able to devise a solution that worked for both parties. If you want more guidance on identifying stakeholders, check out ALGA’s Stakeholder Analysis Training Aid.

Similarly, we must watch out for how our brain interprets the individual characteristics or interests of an auditee that are not related to the audit. For instance, psychologists commonly hold that a person’s accent influences the way people view them. People with British accents are considered smart, Southerners are considered nice or potentially unintelligent depending on their vocabulary. Our brain recognizes these different speech patterns and assigns value to them unconsciously. For instance, why might you trust the testimonial evidence of the British accounts receivable clerk more than the clerk from Georgia?

Impacts on Audits

So, how could this impact your audits? The first potential area is hiring. Hiring a diverse range of talent can increase the effectiveness of your audit organization but practicing diversity in hiring is often difficult due to implicit and affinity bias. When you sit down to interview a potential employee, it is easier to remember those that you just clicked with — the candidate who made you laugh or the one who knew how well your favorite sports team was doing. Bosses and hiring managers tend to unconsciously hire the same personality types over and over instead of intentionally seeking out candidates with alternative backgrounds, experiences, and personalities.

For this reason, it is important to develop tools that help you see past this unconscious bias when hiring. For instance, you could develop a case study or some other type of assessment tool to help you evaluate the candidate on their actual skills, not just the funny story they told.

Implicit biases can also impact the types of methodology you use, and the materiality levels chosen. Why do you trust the testimony of an individual? Do you have previous experience with them, or are they part of your “in group”? According to a 2013 report by KPMG, fraudsters are three times more likely to be regarded as friendly than as not and typically believe they are well respected in their organization. Implicit biases play into these types of metrics. It is important to recognize why you trust someone and then assess whether that trust affects your audit. This ties back to the 2018 Yellow Book standard 8.94, which specifies that auditors should evaluate the objectivity, credibility, and reliability of testimonial evidence.

Finally, report language can also be affected by implicit bias. As auditors, the way we communicate a finding or recommendation is often critical to the possibility that change will actually occur. While we all have the best intentions to remain objective, implicit bias affects us without our knowledge. A common check on this is to have multiple people in your shop review a report, as well as have the auditee provide feedback on how findings and recommendations are worded. While not every wording adjustment made by an auditee should make it to the final report, it may be helpful to understand what they believe comes across as harsh or unfair.

Also, check out ALGA’s Inclusive Language Training Aid to ensure implicit bias in your word choice doesn’t seep into your report. This guide further discusses how to make sure you’re putting individuals first and considering context in your reports. In addition, it gives examples of words that are not inclusive and suggests replacement language.

Mitigating Implicit Bias

As we think about strategies to mitigate our implicit biases, it’s important to understand how they form. Recently, researchers have focused on the concept of “bias of crowds.” This concept theorizes that implicit bias “should be perceived as mental associations that are triggered in specific situations and ‘pass through’ individual minds.”

This concept has been partially legitimatized through a number of studies, including one in which the researchers found that women attending a coed college after one year displayed a stronger implicit bias against women in the STEM fields than the women who attended an all-woman college.

Although the research into the effectiveness of countering the formation of implicit bias is still developing, there is evidence that exposing one’s self to examples of people who counter negative stereotypes may reduce the implicit biases of people we see as part of the “out group.” This takes intentional work and stretching ourselves beyond our comfort zone. The result, however, may be that we are less likely to trigger negative mental associations when we work with auditees that are not part of our traditional “in group.”

Fully understanding and appreciating the role that implicit biases play in our work is imperative to minimizing these negative associations and is one key to maintaining our objectivity.

About the Authors

Madison Rorschach is the City Auditor of the City of Denton, TX and previously worked as an internal auditor for the City of College Station. Madison has earned her CIA and CGAP certifications and has been a part of four Knighton Award-winning audits in her career. Currently the Chair of the Association of Local Government Auditor’s Diversity, Equity, and Inclusion Committee, Madison believes local government auditing is key to protecting the peoples’ interests. She holds a bachelor’s degree in Economics from Texas A&M University and enjoys regression analysis more than any person should.

Joshua Oehler is a senior analyst with Harvey M. Rose Associates, working as a member of the Management Audit Division for the County of Santa Clara Board of Supervisors. He has worked on audits involving hiring practices, capital projects, the Department of Corrections and procurement. A new member of the Association of Local Government Auditor’s Diversity, Equity, and Inclusion Committee, Joshua is excited to incorporate some of his prior work as an advocate, lobbyist and social work into this new role.