What is benchmarking in an audit context?

In the context of auditing, benchmarking refers to the practice of using prior evidence to support conclusions in current audits. This approach involves evaluating historical audit results, past performances, or relevant data to draw comparisons and make informed judgments about the current audit context. It allows auditors to assess whether the financial statements and operations align with established norms or performance metrics based on historical data. By referencing prior evidence, auditors can identify trends, anomalies, and areas that may require more focused scrutiny during the current audit.

The ability to leverage past audit findings enhances the overall audit quality and helps ensure that auditors are making decisions based on a comprehensive understanding of the subject matter. In turn, it supports the notion of continual improvement within the auditing process, as existing knowledge contributes to more accurate and reliable assessments.

This concept stands apart from the other options provided. For instance, while comparing financial results against competitors can be useful for assessing market positioning, it doesn’t focus specifically on past audit evidence. Similarly, establishing performance measures for the audit team pertains more to the internal processes of the audit function rather than concrete evidence used in evaluations, and evaluating the effectiveness of IT systems is a distinct aspect of an audit that does not specifically relate to benchmarking in the context described here.