The Problem with Auditing Is ... . (The Stuff Dreams Are Made of)
Marvin L. Stone
Stone, Gray and Company
Most of the other papers delivered at this symposium commence with the word "toward," e.g., Toward Standards for Statistical Sampling, Toward Standards
for Materiality, Toward a Philosophy of Auditing. Apparently our chairman
had no wish to go "toward" further problems in auditing when he assigned my topic. Consequently, my talk may be described as "untoward." I have thought a great deal about my topic since I received the assignment—so much in fact, that it has found its way into my dreams. Before addressing myself formally to the topic, let me describe a few of those dreams. My dreams are seldom, if ever, in technicolor. Everything is in sharply defined black and white—no gray areas, as in real life.
Dream No. 1—Independence and Fees
The scene of dream number one is a courtroom in which Ralph Nader is presiding judge. As my dream commenced, I was on the witness stand and was being asked to describe the CPA's role. The questioner was a not-too-friendly banker who frequently questions the CPA's independence. In all candor, his question was a little more pointed—something like, "What the hell do you auditors do, anyway?"
Casting aside my well-known reticence to speak before an audience, I delivered the following carefully prepared extemporaneous remarks:
The business community in which all of us live and work is very much like a giant football game. Businessmen play the game. The SEC and we CPAs are the officials—the only difference being that the SEC has a whistle, but the CPAs don't.
The public, watching from the stands, relies on the officials to see that everyone plays by the rules—the same rules. The rules are written to permit a little deceptive ball-handling, designed to fool competitors on the other team, but not to prevent the spectators from determining how the game is going—who is gaining ground and who is losing. Many of the onlookers don't even know what the game is all about. They just came along to watch because that's what everyone else was doing. Everyone watching the game is entitled to know that the gains and losses of all the players are measured against the same yard markers.