Many, many years ago I wrote a computer program to automate a sizable portion of the work Farmers Insurance internal audit did in reviewing agency operations. Using calculators, mechanical pencils, and reams and reams of paper (again, this was many years ago), we had been manually evaluating hundreds of premium collections for every one of the more than 1,000 agents we visited annually. The program I wrote allowed us to input the information (manually), push a button, and then sit back and watch as the whizbang technology existing at the time spit out the analysis in a mere 10 to 20 minutes.
This innovation was greeted with the presentation of a laurel and hearty handshake. However, there were naysayers who complained the program was incomplete. I had written it to provide the population size and the number of errors identified, but it did not include the percentage of errors.
Given the population and error figures, any auditor worth his or her daily allotment of continuing professional education credits can determine the error percentage, and it was a similarly easy task for me to rewrite the program to include this information. However, a bigger problem was hidden within these complaints: The auditors were so focused on a number that they had quit thinking. We had agreed with the client that an error rate of 10 percent or more was a problem. Subsequently, the auditors trained themselves to believe that no further work was necessary if the error rate was 9.99999 percent or lower.
They had forgotten that the errors were not the problem; the process that resulted in errors was the problem. It didn’t matter if there was a problem with one item or with 100 items. What mattered was why the problem had occurred.
I was forced to succumb and added a field containing “The most important information without which the world of internal audit as we know it might come to an end.” But building that program taught me a valuable lesson.
Auditors often forget that the condition is not the finding; neither is the criteria. Both merely represent approximations for determining whether the “patient is sick.” The crux of the matter is the cause — the reason the condition does not match the expected criteria. One error may mean there is a problem; 100 may mean there is a problem. But you will never know until you ask why — until you start seeking answers.
Joe Garagiola, a former Major League Baseball player and announcer, once said, “I always thought numbers were to a broadcaster what a lamppost was to a drunk: something to lean on.” He was expressing his disgust at those announcers who took the easy way out — who fell back on statistics when they were too uninformed, too distracted, or too lazy to find something worth saying. Auditors fall into the same trap. Numbers are to auditors as lampposts are to drunks: We lean on them when we don’t want to think.