Stories of connection
By David Barnes
Deloitte Global Risk, Regulatory and Public Policy Leader
When people say they’re losing trust in business or allege that the Big Four firms are partly to blame for corporate greed, scandals and collapses that harm economies, communities and people, I take that personally. At Deloitte, we care deeply about the role that large professional services firms play in enhancing the credibility of the capital markets. If you aren’t trusted in business, it’s tough to stay in business.
That’s especially true for auditors like Deloitte who are charged with providing assurance to investors and capital markets. We’re in the trust business. That’s why we hold ourselves to the highest standards.
Unfortunately, that’s not always enough. Some recent corporate failures have sparked discussions about the quality and relevance of auditing. Whilst some of the criticisms are overblown, I agree that change may be required and certain reform efforts have merit. To close the expectation gap, everyone—auditors, boards and management—needs to do better.
Deloitte is always seeking to improve its audit processes and technologies, and we are currently working both on our own and with others to build support for new standards, policies and practices aimed at strengthening the entire financial reporting ecosystem.
Management accountability. Reform must start with strong company management, controls and governance. Because audits of financial statements on their own cannot detect all mismanagement, Deloitte favors strengthening companies’ internal controls relating to operations, reporting and compliance. We also support enhanced audit work around such controls and the statements management makes in annual reports.
Corporate governance. To improve corporate oversight, Deloitte supports greater independence, accountability and expertise on corporate boards and stronger audit committees. We’d like to see shareholders have more say on issues such as auditor appointments. And we believe entities responsible for regulating auditors should be independent and use the latest technologies and tools to fulfill their mandates.
Misinformation and wrongdoing. Deloitte encourages companies to embrace tools that better identify misinformation and wrongdoing. We are increasing investments in advanced technologies and methods that can help drive audit quality improvements and better detect fraudulent behavior. This includes greater use of artificial intelligence, data-based risk-sensing tools and predictive analysis.
Viability. Even in the most robust of economic times, there are always some companies that fail. Deloitte favors further developing frameworks to help all actors in the reporting ecosystem raise red flags when there are concerns about an institution whose failure could trigger a crisis so authorities can decide what, if any, action is required.
Ultimately, Deloitte encourages greater accountability throughout the financial ecosystem, and we are ready to work with all stakeholders to promote a safer and more resilient marketplace. Everyone has a role to play in enhancing the public’s trust.
Trust that Deloitte will do its part.