Date posted: 24/01/2018 3 min read

Now more than ever, society needs auditors

How auditors enhance public confidence in businesses, charities, and not-for-profits.

In Brief

  • Public trust in society’s major institutions is eroding.
  • Audits can help enhance confidence by providing an independent assessment about the accuracy and reliability of financial statements.
  • In some instances, the work of auditors has also helped organisations avoid disastrous consequences.

By Andy McLean

Andy McLean is a writer and content marketing consultant. www.andymclean.net

Last year a global survey found that “trust is in crisis around the world”. The Edelman Trust Barometer surveyed more than 33,000 people across 28 different countries and found the general population’s trust in four key institutions – business, government, NGOs and the media – was in decline.

In this era of fake news, PR spin, and social media hype, it’s hard to take anything at face value. This presents a challenge for all kinds of organisations, from businesses to charities to community groups: How do you publicly demonstrate the integrity of your work?

Cooperatives face this challenge too, according to Victoria Lewis, CEO of Hair Beauty Co-op, which exists to support hairdressers, barbers, beauticians and make-up artists in South Australia and the Northern Territory:

“Cooperatives are owned and controlled by their members, and are based on the values of community, democracy, equality and solidarity. So it’s absolutely essential we are open and upfront with our members,” says Lewis.

According to the Business Council of Cooperatives and Mutuals, there are an estimated 2,000 cooperatives in Australia boasting 14.8 million members in sectors as diverse as agriculture, health, education, and the arts. Those cooperatives are entrusted to act in members’ best interests at all times.

StevenRusso PKF Adelaide

Steven Russo PKF Adelaide

Clean audit, peace of mind

Cooperatives reinvest any surplus profits back into the cooperative or return them to members. Financial rigor and disclosure is therefore vital, and that is where auditors offer enormous value.

“As a cooperative, we work incredibly hard to make sure we have dotted every ‘i’ and crossed every ‘t’ in not only our financial statements but everything we do,” says Lewis. “We need to be very transparent about our work, and an audit provides an independent evaluation and opinion on our financial reporting.”

Hair Beauty’s auditors are PKF Adelaide, whose partner Steven Russo CA says that a clean audit reinforces the confidence members have in their cooperative. “It also enhances the degree of confidence that banks, creditors and suppliers have in the cooperative’s reporting. All the stakeholders in the chain benefit from that independent verification.”   

Lewis says PKF’s auditors take a “thorough, comprehensive and timely” approach to their work. “That gives us the satisfaction and peace of mind of knowing that we’ve done a good job with our financial statements,” she says. “And during the year, if anything concerns us, then we know we have a direct line to Steven.”

Avoiding disaster

PKF Adelaide provides audit services to organisations of all sizes, explains Russo. “Besides businesses, we also audit many cooperatives, charities and not-for-profits. They exist to support some of the most vulnerable people and groups in our communities. These organisations don’t always have huge reserves of working capital or extensive resources for corporate governance, so it’s vital that we look after them.”

For many of these organisations, PKF’s auditors provide an independent seal of approval and a sounding board. And occasionally, PKF’s auditors have helped a few of them avoid disaster.  

“Our auditors ask questions and gather evidence to support transactions, processes and controls,” says Russo. “During the course of that, there are instances where we spot discrepancies that require action or further investigation. Our work has actually saved some organisations from going to the wall, saving countless jobs in the process.

“We’ve even helped uncover illegal acts, fraud, or misappropriation of funds in a few organisations. Without our involvement, it’s possible that these activities could have continued undetected for months or even years to come.”  

Which brings us back to the importance of trust. Liz Stamford FCA, Audit & Insolvency Leader at Chartered Accountants ANZ, points out that accountants rate highly in surveys such as the Governance Institute of Australia Ethics Index and the Edelman Trust Barometer:

“I like to think that the work of auditors contributes to those results,” says Stamford. “At a time when people are less inclined to take things at face value, it’s essential that we can turn to professionals who can check and evaluate financial statements.”

Audit quality is alive and kicking

Read about the training and work that auditors put in to deliver high quality work.

Find out more