The Role of an Auditor by Marquis Codjia - Updated September 26, Auditors help top leadership manage corporate affairs, providing guidance on various issues ranging from financial accuracy to internal controls to regulatory compliance. Auditors also help department heads identify tools and methodologies to improve operating activities, putting companies on a more financially sustainable path.
What Role Can Accountants Play? A range of stakeholder groups, including shareholders, employees, governments or regulators, non-governmental organizations NGOsthe media and communities, have a growing interest in organizational human rights issues.
As a result of human rights and modern slavery regulations and widespread stakeholder concerns, contemporary organizations face the challenge of developing sustainable solutions to deal with the complexity of integrating financial and human rights performance.
As members of the accounting profession respond to this changing landscape, the question is posed: Do accountants have a role to play in tackling modern slavery?
Accounting firms engage in the process of disclosure productionand both internal and external auditing. When regulators and corporations decide to introduce modern slavery audits, they often claim that it is for accountability, emancipatory Role of auditors sustainability reasons, with the ultimate goal of advancing society.
Role of auditors is possible, however, that such audits are merely symbolic, and corporations are in fact using them to maintain public relations and maximize profit.
Modern slavery audits can be conducted by an internal auditor, who is an employee of the company, or by an independent third party, who may be a consultant, an NGO member, or a public accountant.
A modern slavery-related audit is distinct from a financial audit. Since financial audits focus on financial implications i. A modern slavery audit goes beyond financial attention and investigates if and how a company is complying with human rights standards.
A financial audit has limited or no scope to explore modern slavery. According to Dodd-Frank, the due diligence procedure requires companies to take action to identify, prevent, mitigate, and account for human trafficking and forced labor. Evidence shows that companies are responding to the due diligence procedure.
The due diligence approach in relation to slavery and human trafficking in business suggests that managers understand whether or not their suppliers are violating human rights through slavery. Concerns Over Human Rights and Modern Slavery Audits While regulators and companies are generally positive about their existing human rights or modern slavery control measures, critics argue that the way companies use them does not create accountability to the wider community.
In a recent reportPwC noted that the nature of these audits is not held in high regard, with critics often referring to the audit history of factories in the Rana Plaza building in Bangladesh as an example of audit failure the building collapsed in PwC also argues that some suppliers exploit weaknesses in audit plans and procedures.
If an audit is carried out with a profit maximization motive, this may create a dead-end to corporate accountability.
While there are concerns over the misuse of modern slavery audits, extant acts such as the UK Modern Slavery Act do not provide effective means by which an audit can be enforced. However, even independent third party auditors may find it difficult to trace or identify modern slavery within complex business operations, including supply chains, if they are not well trained and not independent enough.
The Limits of Corporate Social Responsibility? While professional accountants in particular are involved in the audit production process, their role—as part of a management-driven internal or external audit—appears challenging enough to actually create positive change in corporate modern slavery.
Do Accountants Have a Role to Play? While modern slavery-related disclosure and audit is the cornerstone of corporate accountability and transparency in the era of modern slavery, along with regulators themselves accountants face challenges coping with the regulations that surround the phenomenon.
Accountants and auditors need to know that while existing legislation suggests carrying out independent third party audits, challenges may arise when aiming to tackle modern slavery.
An audit could be conducted by an inefficient and incompetent independent person. Firm managers may not give adequate and sincere attention to the audit and its results. Audits may be conducted occasionally or on an irregular basis, or they may only be conducted when a company faces a crisis a number of companies only began using independent audits after the Rana Plaza disaster.
As modern slavery audits are mostly worker-centered, worker voices need to be heard. Slavery, forced labor and physical or verbal abuse may not be fully discovered until auditors talk to factory workers and the local community or create a dialogic environment where workers are free to talk.
The cost of audits or audit fee are much higher for suppliers if lead firms shift such costs to the suppliers. This is especially true for emerging economies.
It is difficult for auditors to locate or identify slavery in high-risk supply regions.The median annual wage for accountants and auditors was $69, in May The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less.
The function of the IRBA is to help create an ethical, value-driven financial sector that encourages investment, creates confidence in the financial markets and promotes sound practices.
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