When it comes to counting, the beginning must appeal to the classic phrase of the story: Once upon a time there was an audit that enjoyed trust and credibility, until the present arrived with its globality broadening the perception in the public that the audit and its institutions are unwilling or unable to restructure the control and oversight model. And nostalgia and fear have invaded auditors as they unveiled the Third Global Survey of the Profession conducted by the International Federation of Accountants (IFAC) that concerns its members, protecting the reputation of auditing as the top issue. for the profession. For this reason, it is not by chance that the International Organization of Supreme Audit Institutions (INTOSAI) held on May 26 and 27, 2010, in Vienna,conference on Strengthening Supreme Audit Institutions (SAIs) and it is mainly recommended “to promote the dissemination of the value and benefits of independent SAIs” (www.intosai.org in Conclusions and Recommendations, p. 6/6), but:
Does the audit and its institutional framework have value?
José Antonio Gonzalo Angulo, President of the Spanish Accounting and Auditing Institute (ICAC) says in an interview "the activity of the auditors has gone from being unknown to being an understood social value".
And, Mar Rodríguez Serrano, journalist from the Communication Department of the Institute of Chartered Accountants of Spain, based on the Third Survey, referred to above, interprets “The auditing of accounts has already overcome some episodes that have occurred abroad several years ago that They had an impact on the credibility of the profession internationally and even led to the disappearance of one of its most recognized firms. Today, the young generations are once again identifying with the profession, with the values it represents ”. In the same vein, Ignacio Cabeza del Salvador, auditor of the Navarra Chamber of Comptos, affirms “we highlight that the accounting and auditing regulations have not been one of the main triggers of the current crisis,Unlike the one that occurred at the beginning of this decade with the now famous ENRON case; In other words, the current crisis is basically financial and one of loss of confidence, in which accountants and auditors are not being excessively affected, due to the intense regulation and supervision of their activity that arose as a result of the aforementioned ENRON case.
In order to restore this confidence to the markets, the contribution of the auditors and the values that they represent to society are recognized as essential ”. From the foregoing, it can be inferred, on the one hand, that the prevailing conception that auditing and its institutionality represents a value. However, the previous references use the term value more in a metaphorical or abstract sense, alluding to the merit and importance, but this notion is handled as an assumption, which is not explicit, derived that it is an "understood", but a professional practice that pretends to be rigorous must build its conceptual notions based on truth and clarity. The value is related to ethics, axiology or theory of values, and is understood by these to brotherhood, equality, freedom, peace, among others;It is also expressed that social values are the main component to maintain good and harmonious social relationships.
For this reason, considering that the audit and its institutional framework express or represent a value, or even more, a social value is an incongruity that lacks intellectual support. However, the INTOSAI Code of Ethics brings us closer to the value, in chapter I, introduction, point number 6, it is said “It is of fundamental importance that the SAI arouses credibility and trust. The auditor achieves this by adopting and applying the ethical requirements of the notions embodied in the following key concepts: integrity, independence and objectivity, confidentiality and professional competence ”. But, ethics is a taking of personal position, that is, the subject or professional, assumes or not, the commitment to govern their actions based on ethics. Therefore, it is one thing to observe on paper what is expected of the auditor,and another, to assume it in real life. For example, in 2005, in Mexico City a Forum was held in which the heads of different Control and Supervision Bodies participated, and its Report states “The progress made by the State Audit Office of Hungary in the field of control, for a relatively recent institution, led to its incumbent, Dr. Arpad Kováks, being appointed President of INTOSAI, a position he holds today.led to its incumbent, Dr. Arpad Kováks, being appointed President of INTOSAI, a position he currently holds.led to its incumbent, Dr. Arpad Kováks, being appointed President of INTOSAI, a position he currently holds.
For the student of audit, and for all those interested in the subject, it is particularly relevant to study the Hungarian audit model and the role that the State Office led by Dr. Kováks has been playing in the democratic transformation of that country ", the curriculum of Dr. Kováks is really impressive, “As part of his preparation in the field of auditing, he participated in a training at the General Camping Office in 1989 in Washington DC From 1980 to 1986 he worked as Head of Division and later as Director in the State Audit Organization, his work was related to the Audit Directorate in the Privatization Area of Government Assets and in Social Security.
He received training in the Commission of the European Union in 1983, in 1996 he was nominated to chair the Board of Directors of the Hungarian Company for Privatization and Investments, performing this function until the end of 1997, when he was elected as President of the State Office of Audit. And later he was appointed President of INTOSAI, a position he currently holds ”, and in his“ keynote address ”Dr. Kováks pointed out“ With the objective of an effective government (good governance), success in meeting the requirements demanded by said government, like accountability;transparency and openness are unavoidable prerequisites of institutional responses to new challenges (…) we will fulfill the requirement of assisting in the creation of a new global financial architecture that will integrate as one of its most important factors an audit system capable of managing and solve the biggest risks, in line with the new and complicated global processes ”.
Beyond the applause and praise that the intervention of the then President of INTOSAI should have generated, with the euro crisis and public finances in Hungary, which may be in a similar state to the one that caused the collapse in Greek bonds, for the For scholars of the history of control, the case of Hungary will be a relevant case to analyze, because in September 2006, a video was leaked into the air where the Prime Minister of Hungary, Ferenc Gyvrcsany, admitted to having lied to the nation for four years, declaring: “If we had to render accounts to the country for what we did for four years, what would we say? We lie in the morning, we lie in the afternoon ”. So what good was Dr. Kováks's training and experience if his speech was left as a dead letter.And this is what generates the lack of credibility, the disconnect between what people see and what they hear, often from the authorities themselves, about what happens with the management of public funds. And the foregoing leads us to the other part, the thinking in the audit considers that the Enron issue is a problem that has been overcome, and that the current crisis does not involve the audit and its institutions.
So much so, that the INTOSAI Journal says, with respect to Enron's situation, “GAO has no responsibility for auditing private sector companies, such as Enron, we are carrying out a series of actions aimed at helping to Congress to decide what to do in light of Enron's decline and fall ”(since they did not help because corporate, banking and financial scandals occurred again later). Now, the General Secretariat of INTOSAI has participated in the 9th meeting of the United Nations Committee of Experts on Public Administration on April 19-23, 2010, in New York, “This year's meeting is dedicated to the challenges and possibilities of public administration in connection with the financial and economic crisis.
The INTOSAI General Secretariat participates as an observer in the meeting of the Expert Committee and was invited to present a presentation on the topic 'Transparency and Responsive Accountability' ”(www.intosai.org news). Or, Opinion 1/2010 approved by the European Court of Auditors on January 14, and entitled "Improving the financial management of the European Union budget: Risks and challenges" that superficially addresses the problem of deficiencies in evaluation and monitoring. But also, the IV National Congress of Auditing in the Public Sector of Spain, held from May 25 to 27, 2010, among one of the topics: Public auditing in a context of economic crisis. But the approach places the audit outside the crisis,and the possible risk of this is only considered in the context of the economic crisis.
Although if a Prime Minister of Hungary admits that he has lied in his accountability to his country, is the Audit Institution exempt from liability? And does INTOSAI not have a responsibility to account for what happened to one of its prominent leaders and re-examine the audit model when we were encouraged to study it as a role model?
Any presentation or comment from INTOSAI or IFAC on the economic crisis should be met with a strong dose of self-criticism and reflection.
Because after all, from the serious media scandals that have shaken international public opinion to the minor cases of fraud and corruption that have only occupied the regional or national interest, the audit and its institutional framework have had a crucial participation or omission.
And in the face of a deepening crisis, it is not only illusory but also blatant cynicism that INTOSAI and IFAC continue to hold the same discourse of accountability and transparency, when Ernest & Young has not been transparent, much less punished for having hidden 50 billion dollars of insolvent assets in Lehman Brothers causing the financial crisis, in addition to the case of Greece where Goldman Sachs concealed the insolvency of its government triggering the euro crisis, and also the hiding and lying of the Hungarian government, and all the above indicates that the list is going to grow.
Because the discourse of those responsible for exercising control is superficial, for example, “I reaffirm that it is not a matter of greater regulation (…) but, together with education in values, of prophylaxis or prevention (…) None of us we are angels, nor are those that govern us. If this were the case, controls would not be necessary, as James Madison said more than two hundred years ago (…) And what is known as civil society is the one who can best articulate control and prevention ”. To the above, indeed the problem is not one of greater regulation, but one of determination, why the current regulation has failed; being exemplary that the Auditor of Castilla-La Mancha and President of FIASEP, resembles the auditors and governors closer to angels than demons,when reality tells us that it should be the other way around.
Although finally appealing to the religious conception to justify the controls derived from the weakness of man, leads to delineating the audit and its institutions from their responsibility. Because the question is not the existence of controls but why the control has stopped working.
Not from the perspective of “outside”, as stated by Pilar Jiménez Rius, Lawyer of the Spanish Court of Accounts, when saying “no one questions what is our system of control of public spending or if said control system is adequate and works. But, ultimately, Spain's control institutions now have the opportunity to demonstrate their real potential and their incalculable value ”. In other words, spending control can be questioned, but the audit and its institutional framework is of "enormous value." What he reiterates, the lack of critical capacity in the officials of the control and oversight bodies, and they are still “surprised” when in the midst of the economic crisis, everyone talks about reforms, but those who are forgotten are the control institutions. Yes,They attend the meetings of the experts in public administration as "stick witnesses", that is, as observers, but it could not be otherwise, they have been "educated" to keep secrets, because the audit from its origin arose for the power private.
But both the exercise of private and public power require a dark development, which has allowed them and allows them to impose their decisions that are impossible to justify when clarity becomes. For this he has required the auditor, a mute but diligent servant, who sometimes averts his eyes and at other times participates in the lie. For this reason, the emergence of public auditing is late, the vision of private auditing dominates it, but the orthodox belief about the role of the public auditor is changing, it is no longer just a technician who issues opinions on the financial situation of a company. entity, also begins to reflect and theorize about the work of public auditing and its institutionality, see the number of recent publications, however, we are at the dawn,the exercise of criticism is a pale shadow before the maelstrom of apologetic articles, however, the positive is the appearance of a new attitude based on research, and sooner or later, the audit that has been based on simply repeating a pattern, Just like repeating the auditing standards without reflection, a step will be taken to build a New Public Audit that founds a new model that responds to the challenges posed by today's world.a step forward will be taken to build a New Public Audit that establishes a new model that responds to the challenges posed by today's world.a step forward will be taken to build a New Public Audit that establishes a new model that responds to the challenges posed by today's world.
In another order, Attorney Jiménez Rius, affirms that nobody questions the control system in Spain, perhaps it is true, but in Mexico for five years, Salvador Sánchez Vázquez, president of the Supervisory Audit Commission of the Federation (ASF), stated "the Mexican inspection model must be thoroughly reviewed" and also for several years, various State Superior Audits (the Mexican OCEX) have been "trapped" in the alleged restructuring, because they have set aside the examination of the audit and its institutional framework. Now that the CPC Juan Manuel Portal Martínez, head of the ASF has been appointed President of the INTOSAI Governing Board, let us hope that he assumes his leadership role and dares to truly initiate the transformation in audit.
It was considered that the new regulations, after Enron, would prevent new cases, but this has not been the case, Ernest & Young has shown it, but also the SAIs of Greece and Hungary, then, we must affirm that the central problem of the audit and its institutional framework is the crisis in its regulations, because it has not guaranteed effective development and independence in its activity. However, the audit and its institutional framework have acquired trust and legitimacy, because society has believed that it constitutes an essential reference in the control and evaluation of public and private funds, and that it contributes to the process of accountability and transparency.
Hence, the tradition that the organizations and institutions of control and supervision cannot be questioned; its regulations have been found outside of criticism and reflection, as presented below: “How should SAIs be? What is its role in the accountability systems of today's democratic states? How is the SAI itself accountable to public authorities and society? These three questions seem to summarize the priority issues on the supreme audit public agenda. To be in a position to come up with an answer, it is necessary to resort to the institutional documents of INTOSAI, since they constitute a legitimate and scientifically valid source of information on the matter ”.
But, the institutions do not justify or legitimize themselves, they have their own history, and the previous questions are weakened by the concrete reality of Greece and Hungary. Or, should SAIs be like the State Audit Office of the Republic of Hungary, or what was its role in the lie of the Prime Minister for four years, and has he been accountable to the public authorities and the Hungarian people? For this reason, credibility and prestige in SAIs are generated when they serve the majority, not when they serve the minority.
A New Public Audit requires a critical review of more than half a century (1953-2010) of suffering the dominance of private auditing. The great mirage or illusion of public auditing has been generated by false assumptions that are an essential part of its foundation, resulting in a way of seeing the world of public administration and management, not in terms of the sense of sight, but as perception, understanding, and interpretation. Briefly, the assumptions below:
1. The assumption of transparency. Ramón Muñoz Álvarez (official of the Court of Accounts, president and counselor of the Madrid Chamber of Accounts), creator and editor of the Declaration of Lima, exemplifies this belief, by expressing “He recalled that INTOSAI, since its foundation in 1953, it has provided an important institutional framework on transparency ”. Later, in the INTOSAI Strategic Plan 2005-2010, in the Vision, it says “SAIs help their respective Administrations to improve transparency”. In other words, since 1953 a transparency framework was provided, and now it has only remained to perfect it. For its part, IFAC states that its structure and direction are designed to promote transparency. And, the III National Congress of Auditing in the Public Sector of Spain,concluded "The improvement in the practice of auditing in the Spanish public sector leads to greater transparency in public management." Likewise, the FIASEP Foundation has as its motto 'Audit for transparency in the public sector' and being a specialized center that aims to promote the training of professionals who perform audits in the public sector, it has not only become a Unquestionable truth but as a dogma that repeats that 'the public audit guarantees transparency'.The FIASEP Foundation's motto is 'Audit for transparency in the public sector' and, being a specialized center that aims to promote the training of professionals who perform audits in the public sector, it has not only become an unquestionable truth but as a dogma that repeats that 'public auditing guarantees transparency'.The FIASEP Foundation's motto is 'Audit for transparency in the public sector' and, being a specialized center that aims to promote the training of professionals who perform audits in the public sector, it has not only become an unquestionable truth but as a dogma that repeats that 'public auditing guarantees transparency'.
But how can you guarantee transparency if your practice is restricted to secrecy? Furthermore, its clarity only refers to the publication of the report, that is to say, of a part not of the whole, and is justified when it states “the reforms that are carried out must be inspired by criteria of modernization and transparency. As the Public Sector Committee of AECA (Spanish Association of Accounting and Business Administration) has pointed out, transparency must be in the public sector what the market is to the private sector, therefore users of public accounting information have the right to access a part of the information ”. So, if only a part is known, transparency cannot be guaranteed, regardless of how debatable a 'right' is to disclose a part, and not the whole process.
2. The assumption of reliability and / or reliability. In Spain, it is stated that the Audit Report of the Accounts states whether the activity carried out or the financial situation is reasonably reflected, and in everything, whether it accurately reflects the result. Thus, the objective of all accounting information is to get the true picture. José Antonio Gonzalo Angulo, President of the ICAC, affirms "The auditor is not the prudential supervisor, but the one in charge of verifying if the financial statements present a true image". And in Mexico, it is accepted that the control function will be exercised in accordance with the principle of reliability. Ultimately, both terms indicate the same thing, that is, the ability of a piece of information to express with maximum rigor, the basic characteristics and conditions of the events that are intended to be revealed,and it is accepted that information is reliable and / or trustworthy, when it is impartial, objective, and verifiable.
Currently, in Spain, Mexico, and in most of the countries, the audit has sought in the financial statements the way to represent the reality of an entity, for example, in Mexico the Standards and Methodology for Issuance have been approved of Financial Information and Structure of the Basic Financial Statements of the Public Entity and Characteristics of its Notes (12-09-2009), where it is stated “The government financial statements are the representation of the information of a public entity.
The objective of the financial statements is to disclose in a consistent, truthful and timely manner, the basic operations of each public entity in order to be able to fulfill the four main objectives of the public administration: Provide transparency to operations; Accountability; Facilitate inspection; and, Evaluation of the performance of activities based on indicators ”. And certainly the rendering of accounts is anchored in the accounts, but to count is to number things, considering them as homogeneous units, to put or take into account, and essentially, only what is quantifiable can be counted; which indicates that it is a conceptual category. But can public reality be expressed or represented only through quantification?
And when a quality audit is demanded, it is not incongruous, because the categorical leap from quantity to quality, a methodological and epistemological problem, has not been resolved. Although academic training has reduced auditing to a simple technique, lacking the competencies and abilities to respond to the challenge of driving auditing towards science.
But in addition, the vision of traditional auditing (read private auditing) considers public reality as a concrete expression, which is in a certain way, without considering the complexities, its dynamic nature, with contingent and underlying modalities, that accounting does not manages to apprehend. And the tragedy of the Accounts, of the Public Accounts, is that they have been limited and reduced to an expression of financial statements. When public management presents multiple facets that transcend the quantitative, realities that are not scrutinized, and that represent a void where corruption and impunity take place.
3. The assumption of objectivity. INTOSAI in its Auditing Standards, in the area of Independence, emphasizes that "The need for objectivity in the audit is vital" (point 2.2.3) and adds "SAIs must be objective- and appear so" (point 2.2.40), then, if it is vital, why is it not considered as its central value? Or why has it not been defined in your Glossary or in the Auditing Standards themselves? This manifest conceptual indeterminacy on a key notion has led INTOSAI to incorrectly express "the audit must be objective or appear so." But no, it is a false statement, objectivity is not generated by an imperative or norm; It is a characteristic of the structure of science, a referent of the concrete public reality,by determining what are the properties of the object of the public audit, its methodological procedures, ways of knowing, and the necessary relationships of each public reality. Furthermore, INTOSAI's discourse has been to privilege the simulated (apparent) reality of the auditing entities, and in this sense it has built the illusion of the “superior audit”.
4. The assumption of regulations. It has been understood and accepted that the auditing regulations constitute the technical formula that serves as a standard or rule to ensure the effective conduct of the audit. And the associations and institutions of the profession have demanded unrestricted respect for the auditing standards, but their dogmatization has led to the most disturbing feature of the regulations, their "normalization." By virtue of which the rules are maintained despite their deficiencies or weaknesses. Thus, the institutionalization of regulations has not made it possible to consider the relationship between the lack of capacity to change in the auditing entities, the lack of spaces for dialogue, the failure to promote critical reading by auditors, and an audit and institutions that remain closed, dogmatic,and secret.
But also, how to continue privileging reliability as a normative goal, when the concept of objectivity is used without rigor; or it goes to the public reality without connecting it with its historicity, that is, with politics and the social, derived from the illusory conception of INTOSAI, that independence “refers to, to act in accordance with its mandate of supervision without being subject to guidelines or external interference of any kind ”(Glossary of Auditing Standards, p. 74). However, it has been attempted to avoid this interference by personal positioning. And the appropriate thing with respect to the examination of the management of public funds is not to allow ethics to continue to be its guarantor, but that the public audit is based on the demonstration, truly, objective and impartial.
Epilogue
The hypothesis to be developed: In what way the assumptions, mentioned above, in the practice of public auditing have represented an obstacle to improve transparency and accountability in society.
Because accountability is perceived as an opaque fact, derived from an audit that does not base its actions, procedures, and results on clarity. And radical change if possible, as we modify the fundamentals of the current audit. Meanwhile, we see the world of public auditing, as we have been conditioned to see it; Although the ideas, previously exposed, try to create new lenses that look at new realities, but in the meantime, this story has ended, although it is not the end…
