As part of our conference yesterday on reporting, we hosted a session on assurance and auditing.
Entitled, “Is it a waste of money?” we had plenty of robust debate. I chaired the session.
I aired my views, mentioned in a post yesterday/monday.
I was firmly ‘put in my place’ by at least three large companies, Nestle and Volkswagen amongst them.
Their view is that for the money, it keeps people on their toes internally, helps integrate CR/SD thinking, and provides management with re-assurance that they are on the right track.
The report they receive, which is different from what is put out in public, is apparently very useful.
I take their points, but I’m still not convinced it’s the best use of 50-100K a year. It still feels like outsourcing management controls when they should be managed internally.
I know that figure is a drop in the ocean for a big company, I just can’t help thinking that money could be put to better use on genuine stakeholder engagement and demonstrating that.
The companies said they do that anyway and assurance is on top, and that investors say they like it.
Also that assurance only looks at what is said, and not at what is not said. I take that point. That is also perhaps the fundamental problem with the very idea itself.
They may be right about investors, but for me, the biggest problem that reports have is that almost all fail to give constructively critical, representative stakeholders a proper, authentic voice.
That’s a lot harder to do and sell internally than spending money on assurance, but from an external point of view, it’s a million time more convincing.
“But that’s a different issue from assurance”, I hear you say.
OK, well if so, spend time and money on that, rather than outsourcing management controls to a very random audit. I suppose it doesn’t matter that much: Do both if you must.
But the stakeholder engagement question is so much more important, yet so overlooked by comparison.