Interesting tidbit (and relevant for internal audit) from an article in the latest Economist on how taking time to make decisions results in getting the ethics right:
Slowing down makes us more ethical. When confronted with a clear choice between right and wrong, people are five times more likely to do the right thing if they have time to think about it than if they are forced to make a snap decision. Organizations with a “fast pulse” (such as banks) are more likely to suffer from ethical problems than those that move more slowly… The authors suggest that companies should make greater use of “cooling-off periods” or introduce several levels of approval for important decisions.
Several levels of approval for important decisions sounds like a fantastic idea to me. What I find is that too many decisions are made or approvals given orally in meetings, with scant evidence to support their existence later, in case of an audit. Surely introducing more rigor around this aspect of approvals would further improve ethical behaviour!
Delay even works in fields where time might seem to be of the essence. Doctors and pilots can profit from following a checklist, even when doing things they have done many times before. A list slows them down and makes them more methodical, as Atul Gawande describes in “The Checklist Manifesto”.
Now you’re beginning to see why this article prompted me to write a blog post for the first time in umpteen weeks! Not just levels of approval, but checklists too? Be still my beating heart!
Auditors have been employing checklists to improve quality for eons. It’s great to see articles like this extolling their virtues to all people and for all tasks.
Baseball is back and it’s always great to welcome the boys of summer back to town after a long, grey winter in Toronto. The Jays are in Cleveland this weekend, but the home opener is on Monday and it’s always an awesome time. I’ve got my ticket!
In the March issue of CA Magazine, Jays president Paul Beeston, FCA graces the cover and is featured in a great profile of his career with the Jays, MLB and Labatt. He also talks about how his CA training has helped him throughout his career.
While his ebullient personality has made him one of the most popular executives in Major League Baseball, it is Beeston’s sober accounting skills that have made him a treasure for his corporate owners at Labatt and more recently Rogers. “I would say [an accounting background] is almost critical. You have to be able to read a P&L. You can’t lose money and be successful.”
He also waxes poetic about a topic that I’ve touched on a number of times over the years: the difference between getting your CA at a smaller firm versus one of the Big Four. Turns out I’m in good company:
An accountant to the end, Beeston looks back fondly at his time with Coopers & Lybrand in London, Ont., where he received his CA in 1971 (then McDonald Currie) and worked in the tax department. Clients were smaller in London, which meant he got to work on up to 50 audits with different clients over the course of a year. “You learned and you did everything — the tax returns, the auditing — you learned what a financial statement was all about, you learned what financing was about,” Beeston says. He contrasts that with a role in a big firm where an accountant might work on just one client for the better part of a year.
Pretty cool that one of the guys responsible for the Jays back-to-back Series wins in the early 90s is a fellow CA (no pun intended). The team is looking pretty strong this year and the minors are stocked for the future. Let’s play ball!
Dropbox announced yesterday they are increasing the amount of free storage one can earn by referring people to the service!
I wrote a blog post about the service almost three years ago, claiming they made USB drives obsolete. Dropbox offers 2GB of free cloud storage that integrates seemlessly into Windows, Mac and Linux, and more storage (50GB or 100GB) for a monthly or annual fee. They also introduced a service for teams, which I could see being very useful for small businesses with remote workers in particular.
The old blog post was very successful for me, as seven people signed up for Dropbox using my referral link, netting me an extra 500MB each time!
If you haven’t yet tried it, give it a shot. The way it integrates with the operating system makes it so easy to use, and the web interface is great for those times when you don’t have administrator access to your computer but still need to get those files!
One of the big reasons for merging Canada’s accounting professions is the global competition nipping at their (our?) heels. One such challenger, as highlighted in the current CA Magazine, is the Chartered Global Management Accountant certification, a product of the American Institute of Certified Public Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA).
Cue Patrick Bateman: “Look at that subtle off-white coloring; the tasteful thickness of it… Oh my god, it even has a charter.”
I’m not sure why I should be worried about a brand new certification with no history and nascent prestige (to be charitable), but, … uh… hey, free magazine!
Accepting the argument that we need to meet this threat head-on by joining forces with our brethren, this might lead some to believe CMAs would be assuming the front lines in this battle, given their pedigree with management accounting. If we take these upstarts to be our challengers, this will no doubt impact the development of the merged curriculum and other requirements.
CA Magazine’s done some recon:
The hallmark of the CGMA designation is expertise in applying nonfinancial, qualitative information along with financial analysis to understand all aspects of business. According to a study done by the two institutes, this will be in increasing demand by international businesses that want integrated financial and nonfinancial information.
I think what they mean here is expertise is applying non-financial and/or qualitative information. As we all know, there are many important metrics in all businesses which are non-financial, but still quantitative. I think they’re taking that from this page which compares and contrasts financial accounting and the added value of management accounting. Where the former is concerned with the financial, the latter adds non-financial. Where the former focuses on quants, the latter includes qualitative information. (Conclusion: It’s all marketing!)
One thing is for certain, according to the pro-merger forces among us: War is coming.
(Yeah that’s right, I started this with an American Psycho reference and I’m ending it with a Game of Thrones reference. What of it?)
Internal audit. The name leaves something to be desired, in my opinion, and unless you’re familiar with IA, it could be a bit confusing.
It also creates this false dichotomy with external audit that really doesn’t exist. Within the IA context, the audit of financial statements is supplemental and focused on only one risk: reporting risk. Granted, reporting risk holds a special place in the pantheon of enterprise risks, critical to obtaining and maintaining financing, but still.
Why is internal audit content with naming itself only in terms of where its practitioners reside in relation to the organization under audit? Seems quite narrow and vague. Given that IA concerns itself with all enterprise risks, it makes more sense to me to called it Enterprise Audit. This would also dovetail nicely with Enterprise Risk Management. ERM and EA, two sides of the governance coin.
Better branding in this manner would attract more and higher quality people to the profession as well. It sounds far more interesting and rewarding to be in the business of enterprise auditing than internal auditing.
What do you think? Is it too late in the game to make a change like this? Does it matter, so long as those in business understand the role and responsibilities of the auditors?