One of the areas that has great human influence is auditing. The extent of impact it will have depends on how best auditing knowledge, skills, tools and techniques are utilized.
The world has experienced a number of accounting scandals leading to many corporate failures and eventually resulting in the introduction of measures to curb the situation and to prevent future occurrences. The introduction of the Sarbanes Oxley Act to improve corporate governance issues and the metting out of fines by industry regulator, Financial Reporting Council (FRC) to defaulting firms are cases in point.
It seems many people and firms have little or no knowledge on auditing issues. This may largely be due to the apathy sometimes shown and the little knowledge available in the public space.
It is in the light of these that this write-up has come up to draw the attention of all and sundry to the costs to be incurred if auditing is disregarded and the invaluable benefits to be accrued if embraced.
The definition for auditing could be technical but I put forward this definition: “An objective and independent technique that ensures that work or an activity is carried out well to yield desired outcomes.” Whereas, auditing features usually in the accounting and finance sectors, it is noteworthy that all organisations and sectors need auditing.
An aspect of auditing known as operational or performance auditing, which focuses on the effectiveness and efficiency of operations reveals how important auditing is. A school can employ auditing approaches to help in assessing the implementation of a school policy on academic performance. Likewise, a church can evaluate the success of a directive aimed at enhancing Christian living with auditing techniques.
If auditing is ignored, economic lives will badly be affected. This is exemplified with the case of PwC’s audit of BHS’ store chain department in which PwC’s audit was not up to standard hence BHS’ store chain collapsed. PwC’s partner who did the audit has been banned for 15 years and PwC has been fined over 500,000 pounds sterling. This certainly has implications for employees, managers, investors, government and other stakeholders. The collapse has thrown out about 11000 people and reduced the pensions of 20000 people. All these negative ramifications would not have happened had PwC given much more attention to the work being done.
Having brought to light to some extent the need for auditing in all areas of life, it is respectfully submitted that all and sundry and firms make conscious effort to give quality attention to issues on auditing and also make good investment into it.
By: Isaac Nana Opoku /Business.com.gh