Audit: providing a moral compass for business
26 January 2021: Stephen Huyton started his career in audit before moving into business. He believes the profession should be more vocal in its role as defender of business morals.
Stephen Huyton, a Chartered Accountant who worked in practice before moving on to become group finance director of Thermopatch in Europe, sees two ‘courts’ to consider when viewing trust. The first is the court of public opinion, the views of the average person on the street, mostly driven by newspaper headlines. The general public does not understand the regulatory ins and outs of audit and doesn’t understand why this is not considered part of the audit.
Then you have the ‘professional’ court: stakeholders, shareholders, directors, public institutions and investors. It’s an informed audience, so while they do understand the role of the audit, when facing substantial financial loss they will not hold back with their criticisms.
“In the terms of the public court of opinion, at the moment I think we're in trouble,” says Huyton. “And as a result, I think it influences how people look at the profession, and whether they consider it is a career worth pursuing.”
One of the things that has influenced Huyton’s thinking around this is the early career choices of his son. Despite being offered a place on an ACA graduate training program at a Big Four firm in London, he chose instead to take a master’s degree in Spain. He argued that he did not value the ACA qualification in the same way his father did and does.
“I always say to people, the ACA qualification is a master's degree with morals. And I'd like to think that it still is the case, but my son doesn’t see it that way. In part, due to the bad press we’ve had since the financial crisis.”
So, what are the solutions? Firstly, he thinks the profession needs to consider something akin to the Hippocratic oath that doctors take, whereby members of our profession should reaffirm their commitment to an ethical code of conduct every year.
Secondly, Huyton argues auditors need to inform as well as confirm: “At the moment the profession is too much engaged in the confirmation process by looking back, as opposed to the information process, which is looking forward. It's a quite different mindset. This is very much the thrust of the Brydon report, which offers us a route forward and I very much hope the ICAEW and profession as a whole take it to heart. I think the ICAEW audit manifesto and its five principles represents a great response the challenge now is turning words into deeds.”
Thirdly, increasing diversity could also help to change perceptions about the audit profession and help regain trust. Whilst firms are doing a lot of work to bring talented people from different backgrounds into the profession, there is still a disconnect between that work and the make-up of firms at a senior level.
“Audit practices also have a very strict career pyramid and a set way to progress within it. The problem is, if you step out of that pyramid, you lose your place in that progression. This makes it hard to take a career break and then step back into the profession. I think we're still not really grappling with that problem.”
Huyton quotes from an article first published by ICA Australia in 2015 which he considers is even more applicable today: “As a profession, we make a number of promises to our clients, regulators and society in general. Some of the promises we make are in our code of ethics, others are in our logos and mission statements.
“Even identifying and describing ourselves as a professional accountant and a member of a professional accounting body is itself a promise that we will use our expertise responsibly. Our ability to keep our promises has and is going to continue to define the trust society places in us. Without that trust we cannot sustain our professional status. Trust cannot be built on some mystical quality we have. It is built on our collective and individual actions, which are continually broadcast to society”.