Audit is a problem-solving mechanism, not a source of expensive inquiries
May 25, 2015
In return for the financial assistance, transparency is the current demand from Ukraine. As for the business, transparency is the constant demand.
You cannot find any investor who will invest in something he does not understand and cannot find out about on his own. But what is transparency and how to ensure it? Where can you get a certificate stating that your company is crystal clear? Today, both the state and business are trying to find the tools to enhance transparency, not paying attention to what they have already.
Business changes its attitude to the audit
It’s not enough just to have a certificate to be an auditor. First of all, you must possess certain human qualities: intelligence, honor, conscience, dignity and so on and so forth. However, while our society possess these qualities, the state and business, unfortunately, lack them at the moment.
The difference in the value-based approach is a key reason for the current crisis of confidence between the community, business and government. There is also another problem: many Ukrainian auditors are not aware of their true value in building a healthy relationship in this chain.
For many years, the auditors were only an “authority to get help” for the businesses and nothing more. Audits were carried out not with the aim of improving the efficiency and transparency of companies and enterprises, but to obtain an audit report that allowed to fend off claims regulators and attract investors. Ukrainian business did not have incentives to act openly and transparently as none of its competitors really cared about it.
At the same time, the auditors on the European market are aimed at different type of tasks and different format of cooperation with clients. The reputation is everything for them. They spend years to earn it, constantly defending it and improving their skills and the quality of services. Baker Tilly knows this firsthand as it is a part of an international network and is always guided by global standards.
Now we need to overcome this crisis. It's time for the auditors to draw attention to the true value of their work, and the business has to realize that the audit is not the source of expensive inquiries, it is the means of solving many problems.
There are several basic principles of international auditor activity to be followed by businessmen and public services.
1. Demonstrate personal responsibility
The auditor should be the standard of compliance with the law: he should conscientiously pay taxes, prepare reports, receive only "white" wage, etc. After all, how can you encourage your customers to transparency, integrity and honesty if you do not adhere to these values yourself? Therefore, speaking about the fight against corruption, about the payment of taxes and transparent governance at the national level, we should start first of all with ourselves. Only this way we can gradually change the state – by changing our own behavior and choosing a business team of people who adhere to our value system.
2. Be trustworthy
The social contract between state and society should not be based on the principle "we steal at our level and let you steal on yours," it should call for the elimination of theft and for the mutual control. This is what people are trying to reach while they honestly pay taxes and try to somehow change the inefficient functioning of the state system. This is the position that many Ukrainian audit companies, aimed at constructive work, are trying to defend.
3. Be the values provider
Our government and business need to understand that the auditor is not the inspector, he is the provider of such national and universal values as honesty, transparency, and independence. Professional auditor confirms his commitment to these values with his daily work. Of course, there are groups in society that benefit from promoting diametrically opposed ideas.
However, "audit" principles of work in the end still prevail in the market and in life in general. Otherwise, we will simply fail all long-awaited reforms.
Audit quality is defined by the client
Audit quality largely depends on the demand formed by the customers – on a business level or even on the level of the whole state. A customer must have a clear goal if he wants the service to bring benefits – for example, to attract investment, increase transparency, and so on. Therefore, customers should refer to the audit not as to a formality but as to a necessary process that helps to improve efficiency.
Clients who are really focused on the development are interested only in the quality audit. They involve external independent experts who point out to their problems. It helps companies to improve approaches to doing business, improve the transparency of their reporting, improve financial performance and establish communication with the investor, etc.
Thus, the main value of the audit report is not the fact that the company receives in the end the "document from the experts". The main value is the process it goes through on the way to getting the audit report and the results the company will reach by listening to the advice of auditors.
Why the state needs a good audit
Today, a lot of people from the private sector, who understand why we need an audit, work in the government. Now it is very important for the officials to understand that the auditors, first of all, are -professional consultants who can contribute to management efficiency.
All that is important for the audit – focus on constructive values, the desire to obtain practical results, continuous self-improvement and high adaptability to changes – should be the basis of Ukrainian future. The capacity and human resources to make this a reality already exist; what we need is to finally start working.
Management must be ready to change
Most of the directors of Ukrainian companies today need to seriously reconsider their approach to the business management. Society requests business transparency and social responsibility, which is as important as the requirement of government transparency. However, to realize this, companies must have leaders who are ready to upgrade and improve business efficiency. The key point is not to be afraid to change yourself and change your business.