RACY CASES-8 What if auditors advertised?


First Published in HBL
V Pattabhi Ram

For Wafers it was a very educative day at office. The nuggets that she picked up were devastating. Was this a case of her slowly getting transformed from being an airy-fairy student to becoming a worldly-wise adult?

It all began with Doc (that was how they called their Audit manager because he always swore by documentation) asking her to design a power point presentation. She loved power points and her presentations always wowed the people at office. Doc wanted her to draw up a profile of her audit firm. “What?” she exclaimed, almost falling out of her chair. An audit firm drawing up its profile reminded her of wannabe actresses, clutching their portfolio of photographs, walking up and down the office of producers. “Don’t you know” asked Doc, “there is a huge advertisement in the Economic Times from a multinational company asking audit firms to present their credentials for undertaking an audit”?

Wafers saw red. “But we can’t respond to that. The code doesn’t allow us,” she said, taking cudgels with her senior for the first time in two years. Clause 6 of the Code of Conduct which read, “A chartered accountant will be guilty of professional misconduct if he solicits client or professional work either directly or indirectly, by circular, advertisement, personal communication or interview or by any other means”, came blinking on her radar. “That’s okay,” said Doc almost reading her mind. “The ad has appeared on the Institute’s notice board which means it is par on course for us to apply! Also our firm has received a mail from the company asking us whether we would be interested?” “Barkins’ willing” remembered Wafers from Charles Dickens’ immortal book, “Great Expectations”.

The idea of a professional selling himself sounded jarring. She wondered what Muscles, her friend at the medical college, would say when he hears of this. “Would the world’s top neurosurgeons rush in their CVs if the head of a state wanted urgent medical attention?” she could imagine Muscles asking her. “Would you expect someone like C K Prahalad advertise his credentials for running a session?” she could imagine China chide her. Finally she brought herself to ask Doc, “Sir, should a professional at all respond to an ad?” Doc was curt. “Then how do they get to know of us?” he asked. His irritation was palpable. But Wafers couldn’t resist. “From here, the step towards direct soliciting will be small,” she insisted. Her worldly-wise manager said, “Madam, we are in the business of audit. Period.” So the line between profession and business had waned. She wondered how it would be if doctors, lawyers and teachers carried front-page advertisements. “Doing business without advertising is like winking in the dark; you know what you are doing, the other person does not” Doc added.

As she began to get over the initial shock more surprises were in store for her. The partner (they called him Boss) had listed out what should go into the presentation. First, he wanted a list of the firm’s top clients and the annual billing. “Would Dr. Denton Cooley, the world’s top heart surgeon, give a prospective client the list of his patients and how much he charged them”, Wafers asked herself. Next Boss wanted the head of audit and the composition of the audit team to be named. She could fancy Muscles saying, “So Cooley would have to name his operating team. He would have to say who would pick the scalpel, who would stitch the heart, who would cotton out the blood?” The next slide was to list the firm’s strengths and weaknesses. Wafers wondered what would come there? “Multi faceted work force” as a strength? A strong weakness for “poaching more clients?” She asked no one in particular, “Which audit firm would boldly say that albeit their audit, frauds of the most routine type might happen in a company? (E & O E).” It was getting confusing.

As she began adding a dash of color to a slide which talked about the average age of the firm’s relationship with each major client, she remembered something that her friend had confided in her. Of how his firm had lost a stat audit because it had stood by a view which the client didn’t favor. She had then wondered, “Would a fixed tenure followed by rotation of auditors be a good option”? Companies wouldn’t then be able to sack auditors at the drop of a hat. Auditors too wouldn’t bother too much about being on the right side of the client. “A firm gets to know a client may be after 3 years of work. Rotation would be professionally suicidal” her senior had remarked. Another disturbing (to her) point of view had been presented, “it takes us time to build a client relationship: how can someone unilaterally demand rotation.”

Her professor had remarked, “You cannot force a customer to choose his supplier.” Natty point, she had then conceded. Now she wondered whether the relationship between the stat audit firm and client was one between the supplier and the customer. Or whether it was one between the jury and, for want of a better phrase, the accused? While, the accused can select his lawyer, can he select his jury as well she wondered. Her professor had once told the class, “Between them the CEO and the CAO (Chief audit officer) can rob the company.” His choice of phrase may have been bad but she knew he had a point. “Caesar’s wife should be above suspicion” he had remarked in a different context.

But life at the ground level was different. Once when an audit firm had toed the client’s line drawing far fetched arguments to substantiate its point Doc had told her, “Look the audit firms have to make their living.” These (Marketing for clients. Retention of clients) are existential dilemmas which need to be tackled and cannot be pushed under the carpet. May be Doc was right. This is no longer a profession. This is becoming business. Like selling soaps and detergents. Like selling contact lenses. She didn’t cherish it one bit. Was she being old fashioned, she wondered? She knew that she had to talk to her professor. She instinctively trusted him in moments of crisis.

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About Pattabhi Ram

A chartered accountant by profession, a writer by passion and a teacher by accidental choice.
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