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Reconnecting with audit’s moral origins

25 January 2021: Harvard University professor and author Howard Gardner explains how audit can re-establish its moral origins and instil it into a new generation.

Howard Gardner is not an accountant or auditor, but he understands what good work looks like. A developmental psychologist and the John H. and Elisabeth A. Hobbs Research Professor of Cognition and Education at the Harvard Graduate School of Education at Harvard University. He is one of the founders of The Good Project, which for 25 years has produced research and resources on topics such as the meaning of good work, effective collaboration, digital citizenship, and civic participation. He’s the co-author of several books on the idea of ‘good work’: the importance of ethics and morals in day-to-day work.

Gardner believes that audit has a critical role to play in keeping work honest. No economic system, he explains, can function effectively unless the numbers are accurate and free from bias. “The root of ‘auditing’ is the Latin word ‘to hear’—and one wants to ‘hear’ the system as accurately and in as uncontaminated a way as possible,” he says. 

“While accurate auditing does not ensure an ethical system, the absence of accuracy guarantees a system that is not ethical because it is based upon lying, falsification, hiding or distorting information. Just as accurate hearing does not guarantee a good orchestral performance, distorted hearing guarantees an idiosyncratic and flawed performance.”

When the system is flawed, auditors can be agents to restore fair reporting. This is a powerful lever toward positive change. “As we have seen in many developing countries, it’s only when lying and hiding the economic and financial facts ceases to happen, that the system has any chance of correcting itself and producing a ‘healthier’ society,” he continues.

Gardner cites Singapore as an example of this in action. You could look at the political system in Singapore and see flaws, but its banking, financial and treasury reporting are accurate, which is important. “As someone who monitors the situation in Singapore, it’s heartening to see when those involved with financial shenanigans are identified, they are punished and removed from the system promptly. Of course, this rarely happens in many other countries, where society as a whole is damaged by wholesale misrepresentations, bribery, two sets of books, etc.”

How does the profession redefine its role in society?

As Gardner sees it, the auditor has a fundamental role to play as part of this, so how does the profession redefine and re-establish its place in modern society? Gardner draws on his research into professions. The key is to go back to its origins, he says. New auditors need to understand what it means to have accurate and unbiased reporting, and the consequences for failing to ensure it, with adequate accountability.

“In our experience, this step is best taken by apprenticeships, in which novices watch exemplary professionals wrestle with substantive problems that arise. In this case, verifying the accuracy of information and applying approved analytic techniques to deal with problematic issues.”

The UK has a head start in this area, with many firms investing in world-leading apprenticeship programmes, so things are moving in the right direction as far as Gardner is concerned.

Gardner and his Good Project colleagues Mihaly Csikszentmihalyi and William Damon speak of the ‘Ds’:

  • Defining Dilemmas
  • Discussing and Debating options
  • Making the best Decision one can make
  • Debriefing afterwards
  • Then repeating the cycle indefinitely.

Personal morals vs organisational objectives

Applying your own personal morals and ethics to audit is a complex issue, Garder explains. “When one is carrying out a professional role, one’s primary obligations are to the norms of that profession. Usually, there should not be a conflict with personal beliefs. When there is a conflict, we speak about the tension between the ‘ethics of roles,’ on the one hand, and ‘neighbourly morality’ on the other.”

Economist Albert O Hirschman had very relevant ideas in this area, Gardner explains. Members of an organisation owe it loyalty initially. When, in an organisation, you feel that work is being compromised, you should use your voice. If others do not see the problem and ignore what you are saying, then you should exit. 

“Of course, it’s not always easy to exit, though in a democratic society, it is possible,” says Gardner. “It’s better to be in a society where neighbourly morality and the ethics of roles are aligned. But that won’t always be the case—hence the utility of Hirschman’s recommendation.”

Auditors should regularly discuss challenging issues and how they should be approached with more junior members of the team, and leaders should be active participants. These conversations should be deep and infrequent, rather than regular but superficial. Initially, leaders should present these challenges, but over time it’s best if they come from apprentices and young professionals, who may see the world differently.

“We talk about rings of responsibility,” says Gardner. “Young workers typically feel responsible to themselves and their family and over time, the rings extend to the workplace, the profession of the whole, and even to the wider community (such as the institutions of the society, the political options etc). It’s good to keep all these in mind and to realise that they don’t always correlate with seniority. Some senior so-called professionals are completely enwrapped in themselves, while some young professionals worry about the entire health of their sector.”

More senior auditors should also recognise the ‘good work’ of their junior colleagues. Gardner defines this as work that is: 

  • Excellent in quality; 
  • personally Engaging;
  • and carried out in an Ethical manner.

“We call these the three Es of good work. These should be front and centre and recognised whenever possible.

“Importantly, but more challengingly, it’s equally important to call attention to work that is NOT ethical—and to have genuine penalties. For example, it would have been desirable for those responsible for the Enron failings to lose their professional status. I wish we could pull the plug on politicians who take an oath of office and then proceed to violate it every day, even every hour.”

Professional training

How does Gardner feel training, education and qualifications could align better to support new auditors entering the modern business world? “As someone who grew up in the middle of the 20th century, I had a pretty firm notion of what professions were, how they functioned, what it meant to gain or, less happily, lose one’s professional status. I looked up to the doctors, lawyers, teachers, accountants in my home community and wanted to join their ranks. We cannot make such assumptions anymore.”

The notion of a ‘calling’ is not mentioned or understood, let alone embodied and valued, he says. That concept needs to be reintroduced to audit if it’s to be considered a genuine profession. 

“The idea of a calling, a vocation, a profession, needs to be introduced, exemplified, honoured, and to be distinguished sharply from simply doing what seems easiest to do, as opposed to what it is right to do. And what are the consequences—personal, professional, societal—of work that is compromised or bad?”

Ask hard questions and celebrate good work

We should celebrate good work and talk openly and honestly about what distinguishes good works from bad, says Gardner. The Good Project has created exercises to help organisations and individuals build that habit. 

“A good example is cheating in school,” continues Gardner. “It’s sometimes easy to cheat and often figures in positions of authority ignore the cheating because it is time-consuming to deal with it fairly and substantively, but none of us would want to be treated by a doctor who had cheated their way through medical school or a lawyer who faked their credentials.

“And personally, I want to work with an accountant or auditor who asks me hard questions, not one who sweeps the problems under the rug or prompts the most facile or exculpatory answers, rather than pushing for answers that are honest and accurate.”

It’s also vital to remember that we don’t stop learning throughout our career. We should always seek out opportunities to expand our knowledge, skills and ethics. The easiest way to get into trouble, says Gardner, is to fool yourself into thinking that you know all the answers.

“I hope that as I come to the end of my seventies, I can continue to learn. And, if I can end on a personal note, I was born in Scranton PA, in the same year as President Biden, also a Scrantonian, and I hope that he continues to learn as well. The stakes could not be higher.”