The book's full title will be "The Closing of the Auditor's Mind?: How to Preserve Trust, Virtue, and Wisdom in Modern Auditing”.
Auditing's primary challenge
Auditing is a mechanism for providing assurance on matters of social trust and accountability. And social trust and accountability - the raison d'être of auditing - are currently going through a striking paradigmatic shift. These changes are facilitated by developments in technology, and they are changing the demands on auditing. The importance of the annual external audit opinion on financial statements is in decline. The center of gravity of auditing is shifting toward a more flexible and creative range of assurance mechanisms, with contemporaneous reporting on both the inner workings of organizations and extra-mural activities. This shift of emphasis is increasingly favoring internal auditing and some other specialisms, like environmental auditing and (in healthcare) clinical auditing.
The need for external auditing will not vanish: it will subsist as an element within corporate governance, but the external auditing profession faces a future of managed decline. In the book I shall focus on internal auditing, which appears to be best-positioned to take on the new patterns of accountability.
Auditing's secondary challenge
Audit also faces a secondary challenge (or, perhaps, crisis), arising from the tendencies of professional auditing associations to inculcate in their members an algorithmic, checklist mindset that damages creativity and critical thinking. There has been a growing tendency for modern auditing to ferret tirelessly among the building blocks of information, its explanatory powers petering out as auditors raise their sights to “big picture” perspectives. Moreover, auditing today appears to be under the spell of a pseudoscientific, quasi-superstitious faith in the power of numbers, and this obsession with quantification too often leads to a debilitating distrust of qualitative judgment.
A major theme of the book is therefore loss. In particular, the type of loss that perhaps inevitably accompanies progress. Modern internal auditing has advanced in areas like technological developments, data analytics, and a continuing reach into ever-new areas of activity. But it is a dangerous myth that we are better auditors than our predecessors: although we benefit from ever more powerful technology and a massive quantity of information at our disposal, it is doubtful that the diagnostic abilities and logical acumen we bring to auditing today are of a higher quality than in the past. Analytical skills, logical prowess, skepticism, and resistance to transient faddism are unchanging requirements for good auditing, and our progressive auditing environment needs them more than ever.
Without a remediation of the secondary challenge, the auditing professions are unlikely to possess the wherewithal to satisfactorily address the primary challenge.
Possible solutions
I will suggest approaches to preserving important characteristics of auditing. I believe the safeguarding of these characteristics is necessary if auditing is to avoid falling short of serving the public interest to its full ability. I will structure the analysis through three conceptual lenses, addressing respectively (1) trust (2) virtue and (3) wisdom. I will also discuss some institutional factors that continue to restrain internal auditing. More specifically on the concepts:
(1) The erosion of trust will explore the widening and deepening extension of the “audit society”, identified by Michael Power (born 1957). This will cover the "audit explosion" (the ongoing surge in the volume of auditing); the "audit implosion" (the shift in auditing's center of gravity from the external auditing of financial statements to the internal auditing of the inner workings of institutional risks and internal controls); and the implications of allegations of a “ritualization” of auditing.
(2) The question of virtue will address the role of professional judgment and moral agency in an age of increasingly algorithmic processes. I will explore how the concept of virtue as moral excellence (as understood by Plato and Aristotle) might relate to today's professional auditor. I also address the impact of the increasing commodification of auditing and assess the harm caused by sometimes damaging commercial interests, for whom the billable hour is more important than serving the public good.
(3) The threat to wisdom will review neuroscientific notions of a damaging, collective overuse of the left hemisphere of the brain, which tends to lead us toward losing ourselves in numbers and missing the "big picture". The work of Iain McGilchrist (born 1953) is especially relevant here. I will also try to take stock of the modern world's irrational faith in numbers. that sometimes seems to amount to a form of numerological superstition.
There is some overlapping between these three conceptual pathways, but they provide a useful structural framework for the analysis of these complex topics. Once these matters have been resolved, we shall be well-placed to overhaul auditing's primary crisis.
Concluding thoughts
The book will include a wealth of historical information, as well as references to international cultural, literary, and philosophical figures, in addition to humorous analogies, to reinforce auditing's role at the heart of the human condition in civilized society and in our collective wellbeing.
A final thought: Were auditing not fundamental to our socio-economic and political wellbeing, the dangers it faces would be of minor importance. But reliable auditing bridges gaps arising from asymmetries of power, information, and knowledge, placing it at the core of healthily functioning markets, institutions, and political processes. In brief, auditing deserves our attention because its current challenges (or crises) matters to us.
I am delighted to be working with CRC Press (a Taylor and Francis imprint) for this forthcoming title.
Estimated publication date: late 2024 / early 2025.