AUDITS: ETHICS MATTER
When audit firms shift their focus to profit over doing their main job properly, it’s a recipe for disaster
As one does in trying times, I spent the weekend perusing some literature in a bid to make sense of the hysteria that has catapulted the auditing profession into the court of public opinion recently.
Every day, there’s a new headline suggesting that KPMG’S current woes are the inevitable result of a corrupted system that has failed to protect the public.
It’s a misguided perception — but that doesn’t mean our profession to a situation in which the interests of individuals to whom certain responsibilities have been delegated are at odds with the interests of the corporation.
Again, resolving this is not impossible: we know why we have laws and that we should not have conflicting interests.
While conflicting interests blur our judgment, often we don’t even know we are conflicted. We become so entangled in relationships that we forget the very raison d’être for the association is based on objectivity and independence.
The literature also reminds us of the dangers of “unconscious bias”, another human trait. This is precisely why auditors must exercise professional scepticism — a behavioural competence requiring them to question information and not just accept what they are told.
So let me rephrase Kaptein and Wempe in appealing to those who have the power to steer corporations in the right direction: unethical behaviour will attract bad press if a corporation inflicts damage on someone or something. And it will abolish a corporation’s public image, disempower its stakeholders and extinguish profits.
We can’t afford to disregard the power and speed of the new forums for popular opinion, such as Facebook and Twitter. While this public voice is one of reason in some cases, this is not always so. So we must not unconditionally play to this gallery.
Instead, we need to educate and inform opinions to achieve a fair outcome for society as a whole. Maybe then everyone will sleep well at night.