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Before I begin, I really must set out three caveats:
1. If the truth be known, the subject of statistics has never been my favorite.
2. Secondly, the views that I express to you this morning are mine and mine alone. You have asked for the views of a clientservice audit partner. That's what you are going to get!
3. Lastly, and most importantly, I have not had an opportunity to discuss what I am about to say with the authors of the paper. In public practice, prudence and common courtesy dictate that the auditor review his or her findings in draft form with a client prior to going "on the record." In this fashion, errors of fact and omission, and misconceptions can be rectified in advance.
Given my acknowledged lack of command of the technical aspects of the paper, this failure to observe protocol is even more alarming. I trust to the good faith of the authors in this regard.
OBSERVATIONS
I have made light of my lack of technical skill in statistical theory and related concepts; however, upon reflection, I am probably a "representative sample" of the vast majority of practitioners. When I look at innovations in audit methodology, it is from the following perspective:
1. Does the innovation pass the test of common sense (i.e., common sense as defined by my judgment)?
2. Will the innovation assist me and my team in conducting a higher quality audit? In this context I define quality to encompass the following attributes:
(i) in following the innovation, do we comply with generally accepted auditing standards;
(ii) does the innovation promote audit efficiency (i.e. can we accomplish the task in less time and thereby be more profitable);
(iii) will the innovation be defensible in court if challenged; and
(iv) will the innovation contribute to providing more value to my client and thereby help them become more successful?
I leave the theory behind the innovation to those more qualified in Price Waterhouse to address it. Nevertheless, the "common sense" test that I mentioned above requires a general understanding of the theory, and innovative methodologies are "rolled out" at Price Waterhouse with that in mind. You are not the only ones who have to teach "old dogs new tricks!"