Discussant's response to a multi-attribute model for audit evaluation;

              Discussant's Response to
A Multi-Attribute Model for Audit Evaluation
Joseph X. Loftus
Price Waterhouse
The ability to objectively determine the quality of an audit engagement has thus far eluded accounting firms and others interested in auditing. It has been suggested that if the annual report does not contain any typos, the auditor is not sued, obtains full realization of fees and is reappointed, the audit, at least in the eyes of the auditor, is of high quality. That assessment is somewhat cynical. Ted Mock and Michael Samet in their paper bring to bear a much more reasonable approach for determining a meaningful measure of the quality of an audit.
I concur with the authors that multi-attribute evaluation (MAE) provides a framework for evaluative analysis. However, I submit it is only a framework. Any evaluation analysis—any attempt to conclude as to quality—ultimately rests on the judgments, subjective judgments, of the evaluator. Yes, there are exceptions. We would all agree that the more famous auditing busts over the years were indeed audits with major problems. We have all reviewed audit workpapers which under any test would support calling the audit "excellent." Most audits would fall within the extremes and it is here that subjective elements are important. KNOW THY RATER is crucial in analyzing any results of any evaluation, whether it be the evaluation of an audit, evaluation of personnel or an evaluation of an auditing textbook.
Peer Review Experience
To date, the peer review committee of the AICPA SEC Practice Section has reviewed and accepted some 400 peer review reports. The objective of a peer review is to determine whether the quality control system of a firm met the objectives of the AICPA quality control standards and was being complied with so as to provide the firm with reasonable assurance of conforming with professional standards. Crucial to any such determination is the review of the firm's auditing and accounting engagements. As a result of the review, the reviewers issue a report and, if they note matters which would result in substantial improvement in the reviewed firm's quality control policies or procedures, the reviewers issue a letter of comments. The most difficult problem confronting the peer review committee is the unevenness of reporting resulting from this process. Some reviewers will consider an item so serious as to cause a modified report, while others, confronted with the identical situation, would issue an unqualified report but mention this matter in the letter of comments. We had our first peer review under the aegis of the SEC Practice Section in 1978. We have tinkered with the process ever since in a futile
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