HI Wallace,
I think that the judgement issue you're describing has to be built into auditor training. It also may be dependent on the industry that is being audited. Those industries under regulatory control probably need to be stricter in their audit practices than others.
My general direction to my audit team is to look for multiple violations of procedure before writing a finding. If they see one discrepancy out of a number of records, I have instructed them to make the one violation an observation. Something to look into, but not necessarily a finding yet.
That one deviation may be indicative of a process drifting out of control or it can be an anomoly. Before an auditor writes a finding, I'd like to see the deviation repeated.
When a process is following its original design, but is no longer effective, I instruct the auditors to write an improvement note.
Depending on the seriousness of the issue, sometimes I will warn the auditee that if they do not address the observation or improvement note before the next audit, the problem will be escalated to a finding.
When the auditor is undecided about what to do , we talk before the closing meeting.