The IRAC method enables us to answer the most important question of any rationale “Why?” clearly and based on the formal logic. This method became a practical way of argument for both lawyers and auditors first of all. The essence of this method consists in that any arising issue, which needs to be proved, is divided into sub-questions, the answer to which can be given only in the form of “yes” or “no”. After this, the correct the answer with its justification or with the reference to the regulatory framework is given to each sub-question. The logic of the answer is given or the reference is made to normative sources, then the formulation of the correct answer is given.
This abbreviation consists of the first letters of four words. These are names of four elements that must be consistently present in the written rationale for any position: first an issue, then the rule, the application of the rule and, finally, the conclusion. Objective criteria of argumentation have long been developed in the applied logic. IRAC is a classic syllogism in which a legal norm presents the large premise and facts are the small one, to which this rule applies. This is a completely natural way of building suggestions. The meaning of the thesis is that if you want to prove something, you have to formulate the rule, state the relevant actual circumstances and sum up. This is the easiest scheme for the reader to convince him in the correctness of the author’s position. In other words, the text must be “friendly to the reader”.
An analysis of the normative literature and the author’s own research allowed to identify the lack of the specific guidance on the process of justification and the mechanism of documenting the professional judgment of the auditor. This circumstance significantly simplifies the work of the auditor but makes it subjective and unproven. To confirm the professional judgment, it is necessary to present the direct description of the process of gathering information and specific facts or the evidence on the basis of which the auditor can give his professional judgment. The high importance of the professional judgment in the audit process makes it necessary to define the views and actions of the auditor in the normative procedures of documenting. The development of the methodology for documenting the professional judgment enables to avoid a biased judgment of the auditor in relation to the financial report or the legal case. Lawyers of different nationalities differently formulate their arguments. British and American lawyers most often use the IRAC rule. This is the most convincing statement for both British and American arbitrators. German lawyers, in turn, are used the reverse rule, called CIRA (C). That is, they start with a conclusion and go on to the issue, rule, and analysis then. For them, this sequence of presentation of suggestions is more familiar.
The following example is served as a methodology for presenting arguments on the IRAC principle in the legislation. A person A comes to the grocery store and takes a loaf of bread. Then, he hides the bread under his jacket. The security officer sees him and follows him to the checkout. A person passes by the cashier without stopping and without paying. The security officer stops him at the gate and detains the person A. During interrogation, the person A does not answer and refuses to cooperate. In fact, he is directly hostile to the charges brought against him by the guard. The person A is interrogated during two hours. Finally, it is found out that in fact, he placed a loaf of bread back on the shelf and did not steal it. The person A is suing the food store for the fake detention. Can the A person win in the court? Most jurisdictions in the US admit claims for false detention. Courts consider two elements in determining whether a person A was falsely detained namely the formal reason and the authority. Considering these elements of the case, the courts will further analyze two factors – the reasonable suspicion and the circumstances under which these events have happened. If the officer suspects that somebody committed a crime and he can show that his suspicions are grounded, then he is said to have reasonable suspicions. The courts will also consider whether the event in question took place under conditions where the theft was possible. Overcrowded public places, markets and shops are considered as justified places where a guard can have grounds for the reasonable suspicion. Considering another element of the case, courts will consider the guard as an officer directly charged with security duties, who has the power to detain other persons. Courts will usually provide a reasonable time for detention under the given circumstances. In this case, the reasonable amount of time during which a person can be detained is directly related to the whole situation. So, the person A acted in a crowded place. He was further detained by the guard. The officer saw him picking up a bread loaf and passing by the cash desk without paying. The guard on duty detained him to discover whether the theft had taken place. Then, the person A was released after this fact was not determined. Finally, we must pay attention to the fact that the events have happened at the grocery store, where the privilege of the owner applies to the guard in charge of securing the store and his property. This privilege gives the guard additional freedom in detaining people who have reasonable suspicions. Most courts will rely heavily on the shopkeeper, given the long history of privileges of shop owners in the common legislation. The person A, most likely, will not gain the case in the courts since the guard does not satisfy any of the elements of false detention. The person A was detained legally since the guard had both a fair cause and powers. In addition, the privilege of the shopkeeper also strengthens the legality of the detention. Thus, the person A does not have the right in accordance with the law.