Safe space needed for audit quality evidence
ICAEW is well placed to act as a safe space to allow auditors the chance to provide the volume and quality of evidence, without fear of repercussion, that is necessary to inform the current debate and keep cool heads, argues LSCA President Helen Brennan.
If you ask people how good they think they are at, say, driving, well over half would say they are above average. The law of averages, however, says that they can’t all be right.
Perhaps the same could apply to auditing. Most would say they are above average auditors. I use this as an example of how we can all be biased in our own favour, but also as an example of cognitive dissonance. On the one hand, we might all perceive ourselves as good auditors and yet, at the same time, we accept that there is a problem with audit quality, real or otherwise.
The cognitive dissonance arises because we feel the need to protect and defend our self-image as fundamentally good and decent people. We experience great discomfort when we make less than good decisions, or behave less than impeccably. The natural human tendency is to reduce the dissonance by trying to justify our actions and decisions, rather than to take steps to put right what we’ve done wrong - that’s why people who’ve got themselves into holes tend to keep digging rather than climb out.
They need to keep cool heads and recognise what is required.
It’s really hard for me, as a big firm auditor, to face the current scrutiny. I know that almost everyone I work with is highly intelligent, well-trained and ethical. They set out every day to make good decisions in the public interest.
But when things go wrong, we can’t allow cognitive dissonance to lead us into a pattern of self-justification, either individually, corporately or as a profession. This stops us getting to a clear understanding of what has gone wrong and from taking steps to put it right.
Equally, the same goes for those outside the profession leading the call for change. The more aggressively they challenge the profession, the harder they have to work to justify that aggression - and that doesn’t make for a balanced view point, either.
I won’t deny the need for scrutiny of the leaders of the profession and that we need to contemplate real structural changes to the profession. But I think we also need to take a close look at what’s happening in the ‘engine room’ of audit.
There’s a need for a substantial volume of good quality evidence, unmassaged by the firms, of what it’s like to actually be at the coal face of an audit. We need to know the hours worked, the pressures that come from audit firms, and the pressures from the management of the audited entity.
But of course, we know that is more easily said than done. Members of the audit team may be reluctant, for whatever reason, to speak out.
This is why I believe ICAEW has a vital role to play in the current debate. If it can provide a safe space for all views to be aired, then we will be in a better place to gather the evidence that is so desperately needed to inform the current debate.
Helen Brennan is President of the London Society of Chartered Accountants.
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