Our problems would be fewer if we made a simple conceptual framework of reference before rushing to execute plans
Topics get appropriated by professions. Professions give to themselves prerogatives of defining. This gets reflected in the behaviour of the professionals who get certified for the profession. It applies to audit. If one is not a qualified auditor and has served as the Senior Managing Director of a major global consulting firm devoted to niche consulting including, internal audit, (as the writer of these lines) the hiatus becomes obvious. Auditors are known to be jealous in protecting their domain. On the other hand, audit for many, is far too important an activity to be left only to auditors.
A google search on ‘audit’ establishes that the definition of audit is broadly about formal examination of an organisation’s or individual’s accounts of financial situation. The search gives versions of the definition, quoting from various references. It further implies that the examination of financial records is done to determine if they are accurate and in accordance with specified standards. These standards have local versions and global versions. So be it. The effort at undertaking an audit process requires checking, reviewing, analysing, studying, perusing,assessing, appraising, evaluating for probity. The list of activities can be added to. The ultimate attempt is through financial disclosures and non-financial disclosures, presenting a true and fair view of the actual financial situation.
About 15 years ago, the Chairman of an audit committee of a major public sector undertaking was stumped while seeking to address a simple question: Was the audit committee a fit body of the corporate entity to undertake risk management exercises? Risk management, according to Securities and Exchange Board of India (SEBI), was an essential part of a listed company’s statutory obligations. Notwithstanding the Chair’s personal reservations at understanding the nuances of a discipline, ie risk management just becoming popular, in corporate thinking, the board of the company assigned the task of risk management to the audit committee. Predictably a foreign firm was hired to move the company forward in tidying up its house to prepare for risk management.
That was the time when more than one public sector company began intensively training different levels of the organisation on risk management, as part of the audit effort. It didn’t seem to bother anyone, particularly the fact that one cannot train without a policy framework in position; in this case, on risk management. It was a fit case of masquerading the observance of a form because no one knew any better. This included the competent authorities of the parent Ministry who also sat on respective company boards. This pattern grew exponentially over time cutting across so-called varying political orientations of the Governments.
This particular audit committee, referred to above, ran into further grief when the Chairman of the audit committee, almost to avenge the task thrust on his domain, took the view that the audit committee of the company was entitled to audit whatever it deemed fit. This included energy audit, information audit and the list threatened to get extended with every meeting.
Risk management continued to be reviewed by the people who had heard of it after they became members of the audit committee. The energy audit idea or the information audit idea was allowed to lapse. The world was again at peace; all the columns were being filled. No one felt foolish and no one was any wiser. The above narrative is symptomatic of many changes sweeping today through many portals of the corporate world and many domains of national functioning.
There is nothing like killing a good idea with overuse, ascription for administering it to the people who are innocent of its nuances and above all linking it to unrelated activities. This is happening ever so often, say, with Aadhaar. Not till long ago, it was being peddled that Aadhaar is not an address proof and it has a country-wide validity. Somewhere down the line, it became necessary to change the address on the Aadhaar card after each change of residence. The facilities for doing so are either not well-known or have shrunk in number. Where they exist, the queues were forbidding. Predictably, the response time from Bengaluru for acceptance of the change of address has become unpredictable. Those who are in a transferable job or move residence either ignore the requirement or scamper repeatedly to comply. There were certain situations which require the passport, the PAN card, the Aadhaar card — the list seems open to addition.
The answer to this kind of a situation is not far to seek if one just made a simple conceptual framework of reference before rushing to execution. If there can be a Central registry of KYC, there can be a Central registry of identification marks and residential certification. Perhaps, the simplicity of the suggestion itself would destroy so many jobs that it would be another hit on the employment figures. That the citizen keeps collecting and resubmitting his/her documents could draw ‘cheer’, as now he/she does it electronically.
(The writer is a well-known management consultant)