“Is the Audit Irrelevant?”

March 17, 2014 By Kent Thomas

This headline arrived in an e-mail newsletter this morning. I was intrigued enough by it that I read the article by James Doty, the Chairman of the PCAOB. It didn’t take long to get to his main point – if the accountants who perform audits (or any other function that they typically perform) are not trustworthy, the work that they do is seen as useless or irrelevant by the public or financial statement user. The headline of Doty’s article could well have been “Is the Accountant Irrelevant?” as he reminds those of us who work in the accounting profession, whether we serve as CFO, “trusted advisor”, accountant or auditor, that our services and advice are only valuable if we earn and retain the trust of the ultimate beneficiary of our work – the reader or user of our reports and analyses.

In our world of immediate news coverage and instantaneous social media sharing, the most common headlines about accountants and auditors are not flattering to the profession as they expose the ugly results of greed, selfishness and pride: fraud, theft, deceit and conflicts of interest – all resulting in the deterioration of trust and confidence in the profession. This is demonstrated by a 2012 Gallup poll wherein only 48% of those surveyed ranked the Accounting Profession as high or very high in honesty and ethics – well below the top profession – Nursing at 85%!

It is time for everyone in this profession to step up and make a difference. First by pointing out more of the good that is done by members of the profession. There are countless competent, honest accountants who provide valuable information and excellent work every day. They make a difference to the organizations that they serve or where they are employed, by helping the users of financial reporting make informed decisions that shape strategic plans, increase profitability and ensure the long-term viability of business and governmental entities. Second, we need to assure transparency in all that we do and avoid even the appearance of conflicts of interest – we do that by always making decisions in the best interest of those who we serve, not our own – this is one of Advanced CFO Solutions’ core values and has served us well over the years. At Advanced CFO, we have seen an alarming increase in embezzlement or theft by employees at small businesses since the Great Recession so there is an opportunity for accountants everywhere to help their clients and employers improve internal controls and oversight so that these actions are not allowed or are easily identified. Finally, we must help identify and expose those in the profession who do not have the courage or integrity to do the right thing in all circumstances including those who attempt to do work for which they are incompetent.

Trust is built or destroyed one person, one action at a time – let’s make sure that our actions, all of them, build trust in the profession and emphasize the value of the expertise that we provide.

Kent Thomas is the Founding Partner of Advanced CFO. In that role he has served as the outsourced CFO of over 75 different businesses.  Kent is a licensed CPA and recently served as the President of the Utah Association of CPA’s. He was a founding member of the Olympus Angel Investors and is active in the Utah entrepreneurial community where he advises companies, associations, and educational institutions and is a frequent speaker on finance, accounting and entrepreneurship. Kent is married to Kim Ericson – between them they have eight children and eight grandchildren. They enjoy running, hiking, water sports (especially Lake Powell) and international travel.

 

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