A Future for the Profession
Aiming for public interest, value to the public and public trust
In looking to the future of our profession one cannot help referring to the past. As a profession, there are many things that we can be proud of such as our contributions to economies, business, governance, legislation, regulation, financial reporting, assurance and the list is endless.
Sadly there is also a lot which we need to address and help future leaders and members of our profession to overcome. A conscientious examination would remind us of the times we neglected standards, we misunderstood clients and critics, we misconnected with society, and we worked in isolation. We remember the incidents during the life our profession, especially in the last 50 years where firms or members of our profession were implicated and suffered huge liabilities and penalisation. We wonder why it had to be like that. What went wrong in those sad instances?
A close look at our code of ethics and vast literature on the way in which Accountants should conduct themselves would immediately reveal, at best, inattentiveness to the same rules and regulation which our profession itself has set out when it was entrusted with regulating itself.
Self-regulation was taken away from the profession when the biggest case of them all, Enron brought down the largest most respected accounting firm of them all. It was a time which made us realise that we had gone too far in our misdeeds. It was a time which made us all feel embarrassed. Thankfully, the profession responded by intensifying its co-operation with regulators. This awareness and acceptance managed to save the accountancy profession, but is that enough? If we analyse the way forward we will find sufficient insight into what went wrong.
A recent survey conducted by ACCA confirmed the continuing existence of the expectation gap between what we deliver and what the public expects from us. The profession’s future depends on addressing this gap in a concrete manner.
With the Enron case, came also the Sarbanes Oxley Act and the Statutory Audit Directive, which objective was to make the profession more accountable, to dilute our participation in regulation and to increase transparency.
To guarantee a successful future for our profession we need to go back to our roots. This can be defined in a few words. We need to work in the interest of the public, deliver value and as a result secure trust. This necessitates competence, professional skills, and integrity on which our academic qualifications have been centred.
Earlier in April the European Parliament approved the audit reform under three major motives namely a more societal role for the auditor, a strong independence regime and a single market for auditing.
This is indeed not radical. Rather than work on our own let us make our profession more open, more present in society, more interested in society than in itself and paid-for interest.
Let us begin by concentrating more on self-awareness. Understand who we are, what we do. We deliver public value. We work in the interest of economies and society benefits a lot from our work. The public at large may not be aware of the extent of this. Therefore we need to communicate.
We, as a profession, have not communicated with the stakeholders and the public at large enough in the past. We need to explain what an Accountant is, what Accountants do, the different ways in which we can and do deliver value, how our role has evolved and the range of skills and specialisation within the profession.
In particular, given the communicative nature of auditing and its role of adding credibility to financial reporting, we should explain what an audit is and what it is not, that it is assurance not insurance; that the assurance is reasonable and the difficulties, limitations and realities of measurement which may be imprecise.
We will show how realistic and objective auditing as well as other services add value to a large variety of sectors not least organisations, companies, businesses, shareholders, other stakeholders, employees, business contacts, economies. How we are a pro-active profession with ideas and solutions discussed at the outset rather than reactive and provide solutions and add value only at the end of the engagement. Let us not use letters of engagement to set limits on our services and creativity but rather they should be an opportunity to demonstrate to our client what we can do for him at the very start of the professional engagement. An opportunity to show how we can work together with clients to achieve valuable objectives and solutions.
Accountants and Auditors are constantly faced with ethical dilemmas. The Accountant is continuously challenged to choose between objective ethical considerations and business interests. The profession needs to continuously assess and address legitimate concerns about ethical issues and conflicts of interest. Accountants need to emerge as leaders when faced with pressure to compromise or to trade off critical attributes against business priorities. The Institutes and other accountancy bodies need to strengthen their support structures for those Accountants who might need assistance in addressing such conflicts or who might need to divulge sensitive information – ‘to blow the whistle’.
Accountants work with people and as such they need to apply soft skills to secure a truly workable and smooth relationship with those with whom they come into contact. The Accountant has to engage in meaningful communication also with non-technical people. We have worked too much amongst ourselves around technicalities, which indeed are a fundamental component of our job, but which at times only serve to isolate us from society. We need to be understood by the public at large if we expect the public to trust us. We need to be aware and cognisant of particular societal factors such as transparency to ensure that users understand what we do. We need to listen more to stakeholders and embrace dialogue. Equally important is the need to better understand and respond to the needs of our employees as well as those trainees who are part of an invaluable talent pool.
The actions, which I am writing about, will not be devoid of challenges and difficulties which I trust will be the subject of another article. Challenges which we should expect to face and overcome as we go along. The objective is too precious to let such challenges stand in the way of our profession’s future.