Original YT playout date: 6 March 2010
In these days where corporate governance is taken more seriously and more responsibility devolves on the external auditor in matters of fraud, which used to be considered more the province of the internal auditor, what new powers are auditors being given to cope with the pressure on them to uncover frauds in corporations? No new powers at all, in most countries. Only the downward pressure on fees (down over the last fifteen years by about 50% on PPP) which means that we have less time to do the additional work.
There are, however, techniques available which are similar to those used by the CIA in non-confrontational interrogation, and these techniques are available taught by ex CIA trainers and operatives. The way in which the profession is going is not the way most CPAs want it to go, but as people of integrity who cannot just pay lip service and sign a statement that we have properly investigated fraud risk and sign underneath that, there seems to be no other option that for us to start to avail ourselves of advanced techniques that really have more to do with psychology and criminology than the traditional practice of accountancy. Continue reading “CPA = CIA ???”→
The point of this video is discussing what Descartes‘ famous maxim “I think therefore I am” means to me today, whilst driving past the house he grew up in in the village that bears his name in France.
This is actually video number 18 in the French holiday season, but I didn’t number it as I wanted to present it earlier, so later on the French series will jump from 17 to 19.
The phrase “I think therefore I am” always seemed to me to be ridiculous. After all, when people become thoughtless they don’t just stop existing. They exist as they did before. Some even go through life in a thoughtless state. We have no idea to the extent that animals think – some such as bonoboes, whales and elephants may experience thoughts closer to our own than we may expect. Maybe there is thoughtfulness even further away in the cladoscope from mankind than we would even expect. It doesn’t make the more thinking animal more or less existant than the less thinking animal.
So I decided some time ago that another verb was needed rather than “to be” in order to make a more fitting end to this sentence, and I came upon it while teaching audit. I used to, and still do from time to time, train younger folk how to audit businesses, do reviews, due diligences and all manner of accountancy related services for business. I taught that mindless ticking and bashing of documents, without understanding the heart of an entity’s business, its purposes and its systems, would lead to a valueless and proabably flawed audit process, and that the only way to audit properly was to switch the brain on and keep it switched on for the duration of the audit. So I coined the term “I think, therefore I audit” and taught with this motto all around East Europe in the nineteen nineties and still do from time to time now.
The problem is of course, that because the audit profession is dominated by Big Four firms, who know that they cannot make profits on audits by putting people who can think for themselves on jobs, they have made the profession more and more of a box-filling matter so that junior staff, especially first years fresh from university with precious little practical training and little time to have learned how to think about the things they need to look out for, even though they mainly would probably want to, can go in and perform the bulk of an audit. This is not popular with middle tier clients who want some added value from the observations of their auditor which these younger ones are not yet ready to give, and on the contrary frustrate the client with naive questions as it becomes painfully apparent how they are learning on the job, and the middle tier try to field more senior people on work, and this actually costs our firms more, although we are taking generally less because the audits are smaller and the Big Four are erroneously assumed to have more prestige.
Yes. Even after Enron, and all the other Big Four messes. And the middle tier are forced to endure tighter regulation to assure that audits are being done “properly” but this “properly” means being done the way the Big Four instituted and keep on doing – namely mindless box filling. The Big Four lobby the professional bodies and state how things need to look in the way a standardised audit is carried out, and having any actual talent for sniffing out what could be wrong in a company, having any ability to think your own way through to what could be ailing in a company, these things have no premium whatsoever, on the contrary audit has become such a secretarial job over the last ten years that anyone with a spark of imagination is likely to run from the profession screaming. Continue reading “I think, therefore I audit. I film, therefore I am. (CUV)”→