Authorities in Italy are bracing themselves for anti-globalisation protests at the G8 summit in Genoa this week, and they will doubt be looking at the lessons they can learn from our own May Day protests in London (pictured above).
But – as in our own May Day protests – it is doubtful that big accountancy firms will be targeted this week – which is curious. For if the demonstrators thought a bit harder they might see that if they were really concerned about the power and responsibility and activities of multinational firms, the way to go at it is not through governments or institutions and particularly not through violence, but through the multinationals themselves.
What is required is proper reporting of things that matter and the verification of this by competent and independent people, which ought to mean the auditors.
What should be reported goes beyond the now mythical duty to the shareholder.
What has to be included are environmental matters, wages policies and facts, equal opportunities polices and facts, relationships with small suppliers, world-wide tax strategies, and so on.
And perhaps some kind of view of the company’s citizenship, globally speaking.
Stage one is to lay down and propagate such requirements. Stage two is to get companies to carry them out. And stage three is to get an independent report on compliance or otherwise with these requirements.
Stage one might seem a role for governments.
But in our culture we don’t much like governments doing this sort of thing, so those who lay down audit and accounting standards might have to take this on board themselves, but again it could be down to auditors.
And stage three is clearly down to the auditor who ought to be ready to take this on whatever new competencies they have to learn and risks they might have to face as against not just the companies they audit, but also the public more widely. They too must be more open.
The profession should think about this carefully. It’s been coming for a long time. But the issue is becoming sharper. Seen from the point of view of the shareholders and big companies, their worth is at stake if their board is perceived to be behaving badly; one of the virtues of this move would be to encourage boards to behave better. And if the worth of the company is at stake then that is surely a matter for the auditor’s report; certainly it will be a matter for financial houses and others when the company wants to raise more money. But all that is to take a narrow shareholder- orientated point of view.
The real reason why steps in this direction must be taken is to benefit the global economy and global society more widely by aligning the interest of the shareholder with the interests of this global society.
The accounting profession has big responsibility here and a big opportunity.
And also in a way something of a threat; for if it doesn’t grasp this nettle then governments will undoubtedly do it for them. Auditors must become part of the solution, not part of the problem.
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