The Center for Audit Quality has developed a series of video vignettes for use in the classroom (each approximately five minutes in length) that provide insights into the types of conversations that occur when auditors are assessing the internal controls used by management. In these scenarios, the focus is on a management review control over goodwill impairment estimates. The discussions captured in the videos can also be used in other teaching situations as they highlight communications and interviewing techniques, professional skepticism, and how to navigate conversations on difficult and sensitive issues.
In this vignette, the auditor has scheduled a meeting with the controller to get information about the data and the assumptions the company used to arrive at their goodwill impairment estimates. This video illustrates the challenges faced by both auditors and preparers in explaining, evidencing, and documenting a management review control. Management review controls usually include management estimates and subjectivity which are difficult to evidence. Review controls are highly dependent on the competencies of the individuals performing the control. The auditor is required to evaluate the competency of the individuals, and this can prove to be a source of tension between the auditor and management.
