I have been troubled for some time about our profession…..the profession of auditing. Since I graduated from college in 1972, 60% of the companies that comprised the list of the Fortune 500 are not only no longer on the list today, they are no longer in business. In this age of the information revolution if you are not improving upon the products you make and the services you sell you will become irrelevant to the market…and that will occur at a much faster pace than at any time in our history.
We hear a lot about fraud. First there was Enron and WorldCom. Then there was Madoff and Stanford. You don’t hear so much these days why auditors can’t catch fraud before it devastates lives. And that’s a good thing because the external auditor is not responsible for finding fraud, nor should they be. But I believe they could do a better job….and so could management…and the board….and quite franking everyone in the Corporate Reporting Chain could do a better job when it comes to detecting and deterring fraud.
But people wonder. Investors wonder. Legislators wonder. They wonder what it is that auditors do. What real value do they bring?
I worry sometimes that our profession, that of auditing, both internal and external auditing alike, may someday become irrelevant to the capital markets. Don’t think that can’t happen? I caution you to not think like the fat-cat railroad executives who sat around in the early 1900s smoking expensive cigars and drinking vintage wines boasting that they owned the transportation industry. That’s right, if you needed to travel long distances in a relatively short time period, you had to take a train. The railroad industry could never become irrelevant. Right? Well….the last time I traveled to New York, I did not take a train.
Those who are about to become the next generation of auditors and financial executives are charged with a great challenge. That is to keep the profession of auditing relevant. Trust me when I tell you that task is not assured. And if you believed it were you would be making the same mistake as those railroad executives of the past.
Horrific mistakes have been made in the recent past with Enron and WorldCom being the two most remembered only because of their size….but there have also been some notable others. You see, if we fail to learn from past errors….we are destined to repeat them….and repeat them I fear we are certain to do.
Others topics covered under this area…..
- Sarbanes-Oxley Act – was it worth it?
- Just three things you can do which I know will make you better auditors beginning tomorrow
- The Fraud Triangle – why frauds occur….because sometimes good people do bad things.
- How to react when fraud is suspected
And…. as with all of Tom Golden’s presentations and seminars, the training sticks because it is intertwined with anecdotes from his many, many investigative experiences.