Ghosting case

Entry-Level Auditing Tasks

• Auditors inspect client records and documentation to gain evidence about financial reporting framework applications.

• Tasks involve comparing original client records to reports summarizing those transactions for assurance on completeness and accuracy.

• This document reports a case based on an actual situation involving an auditor's task.

Case Study: Elizabeth Jenkins

• Role: Staff auditor for a large insurance client engagement.

• Focus Area: Claims loss reserves for future claims from insured clients.

• Purpose: Ensure the client’s estimate of claims is correctly stated on the balance sheet, and write-offs appear appropriately on the income statement.

Audit Process Involving Claims Loss Reserve

• Task: Tie out the client's claim loss reserve estimate from an Excel worksheet with system-generated reports.

• Complexity: Calculation involves inputs from multiple sources, making the tie-out process detail-oriented and time-consuming.

• Elizabeth was instructed to compare amounts and insert tick marks to indicate agreement or disagreement between documents.

Issue of 'Ghost Tick Marking'

• Pressured by time and boredom, Elizabeth skipped comparisons and marked agreements without proper verification.

• Justified actions due to trust in good internal controls based on past experiences with the same client.

• This practice was identified as ghost tick marking within the auditing profession.

Consequences of Ghost Tick Marking

• Brett Stein, the senior accountant, reviewed Elizabeth’s work and found discrepancies in the claims loss reserve estimates.

• Instances of noted agreement where the amounts did not match were uncovered, indicating a breach of auditing standards.

Reflection on Auditor's Responsibilities

• Importance of meticulousness and integrity in auditing tasks; negligence can lead to serious errors.

• The audit firm corrected the errors and emphasized the need for adherence to proper auditing processes to prevent recurrence.