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Career News | April 12, 2022

Why Critical Thinking is Essential to Auditing

By DCAA Staff Writer

The concept of critical thinking traces back to Socrates, who used probing questions to reveal inadequate evidence or contradictory beliefs at the foundation of much so-called knowledge. While the concept has evolved through the years and there are many definitions, critical thinking at its core involves the ability to collect, analyze, and evaluate information to reach a sound conclusion or solve a problem.

Breaking Down Critical Thinking

Organizations and businesses tend to define critical thinking in terms of specific skills. Indeed, for example, calls out five critical thinking skills for workers. You may note that each of the below are imperative to the success of every step in the auditing process:

  • Observation: the ability to notice and predict opportunities, problems, and solutions.  
  • Analysis: the gathering, understanding, and interpreting of data and other information.
  • Inference: Drawing conclusions based on relevant data, information, and personal knowledge and experience.
  • Communication: sharing and receiving information with others verbally, nonverbally, and in writing.
  • Problem Solving: the process of gathering, analyzing, and communicating information to identify and troubleshoot solutions.

Why Critical Thinking Is Integral for Auditors

Why are these abilities and skills so important for DCAA auditors? Because not all decisions can be made by simply understanding accounting principles, Generally Accepted Government Auditing Standards (GAGAS), and in-depth Federal Acquisition Regulations (FARs). Much of an auditor’s work hinges on exercising professional judgment through a commitment to dig deep into the available data, looking for outliers or things that don’t add up logically—even when they do numerically. Despite all the guidance and regulations, there are often no black-and-white distinctions or rote step-by-step processes for highly complex and variable contract audits.

The Harvard Business Review describes the ability to synthesize as being able to “sort through a range of information to figure out what is important.” This is a crucial phase in the critical thinking process—and one that is integral to the tasks of an auditor. Auditors need to review a lot of information from many sources in order to even determine what the next step is.

At the most basic level, contract auditing requires a mindset that doesn’t accept things strictly as they seem, but considers what misinformation or errors might skew results. When records don’t match, what can or should be inferred from the conflicting information? What other data points can help resolve the issue—what else do we need to ask or look for?

Faced with voluminous data and limited time, critical thinking is what enables auditors to hone in on what is important, build on their own and others’ experience to surface additional information or omissions, and come to well-reasoned conclusions. It is the disciplined thought, balanced consideration of evidence, and relentless curiosity that engenders the “aha!” – the identification of a problem or recognition of an error that results from your expertise.