|
|  |
 |
|
‘The
Problem with Communication …’
JULY 2007
- “… is the illusion that it has been accomplished.”
The emphasis is my own, and I’m certain that George Bernard
Shaw didn’t have the accounting profession specifically
in mind when he wrote these words, but he might as well have.
Employers say their major concern with today’s accounting
graduates is their level of professional literacy—or more
to the point, their lack of adequate communication skills: reading,
writing, listening, and speaking.
Increased
professional visibility combined with the public’s heightened
expectations of CPAs makes these traits essential for survival
in the current business environment. But many of the profession’s
fundamentals as now taught leave little room for much-needed communication
or critical thinking on the CPA’s part. The attest function
is a prime example: CPAs often use rigidly constructed audit opinion
letters to mitigate legal liability, or for expediency, or both.
Furthermore,
financial statement auditing has historically served as a simplistic
pass/fail exercise; an unqualified opinion means “pass,”
an adverse opinion means “fail,” a qualified opinion
means “pass, except for ... ” and a disclaimer means
“we’re not going to grade you at all.” However,
even an unqualified opinion doesn’t mean that there is zero
risk of errors or fraud. Yet we continue to evaluate the risks
associated with a company’s financial position in absolute
terms of a pass/fail methodology, rather than rating companies
on a fraud risk–assessment scale similar to bond ratings
by Moody’s or Standard & Poor’s. Not unlike the
way that bond ratings are intended to characterize the risk of
holding a bond, rating a company’s control environment could
better communicate the entity’s reporting risks.
Part of the
ongoing public misperception of the accounting profession is the
fallacy that accounting is primarily mathematics-driven. This
causes many students with so-called “left brain” communication
skills to shy away from the field. But in reality, today’s
accountant needs to have equal parts financial, legal, investigative,
and teaching skills.
Financial.
CPAs are responsible for keeping abreast of a continually changing
and expanding body of technical knowledge in accounting, auditing,
and taxes. In addition, accountants are often expected to be well
versed in investment decision–making, college financing,
retirement planning, long-term care insurance—just about
anything that affects their clients’ finances. CPAs must
be ready to live up to the trust clients place in them when it
comes to financial matters.
Legal.
CPAs are asked to exercise their professional judgment on a variety
of issues and must be prepared to justify their decisions within
a legal context. In this area, persuasive communication is what
“separates the men from the boys,” so to speak. They
also should be familiar with various statutes, including the Uniform
Commercial Code, the Internal Revenue Code, and laws related to
fraud.
Investigative.
While an audit conducted in accordance with generally accepted
auditing standards provides “reasonable assurance”
that the financial statements in question are free from material
misstatements due to fraud or error, the so-called “expectation
gap” has left the public wanting more. This has put auditors
in the untenable position of trying to fulfill a responsibility
for which most of them were not adequately trained but in which
the public expects results.
Teaching.
CPAs perform a broad range of services for corporations,
governments, not-for-profit organizations, and individuals. They
are expected to do all of the above and be able to adequately
explain it to a wide range of stakeholders, many of whom may need
to be taught about the accounting basis behind certain decisions
or evaluations.
Total
Communication
Many CPAs
labor under the false assumption that their communications should
be primarily in the form of numbers. Nothing could be further
from the truth; for example, what is not reflected in the numbers
of a company’s financial statements should be thoroughly
explained in the notes. Unfortunately, however, the notes to the
financial statements are often reduced to mumbo jumbo that complies
with the standards but doesn’t actually communicate the
company’s position or its thinking. Enron, WorldCom, and
other audit failures serve as prime examples of how incomprehensible
communication can allow a company’s problems to be hidden
in plain sight.
In short,
we are good at ’rithmetic, but we have miles to go when
it comes to reading and writing. Our mandate as a profession is
to learn how to communicate in a cogent, coherent, and comprehensive
manner. Understandable with plain facts—it would make George
Bernard Shaw proud.
Mary-Jo
Kranacher, MBA, CPA, CFE
Editor-in-Chief
mkranacher@nysscpa.org
|
|