By Christian Ekeigwe, FCA, CPA (Massachusetts), CISA
Visionary, Audit is Trustworthy!
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Audit failures are real, though sometimes hyperbolized. A lot has been done, is being done and will be done to stem the tide of governance and audit failures. Trustworthy audit has consummate expertise, yet audits fail for many reasons, some indeterminate, such as obligatory loss. There is a lot that can be done to alleviate audit failure, but not eradicate it, because obligatory loss is unavoidable in the high metabolism of the cauldron of capitalism.
In the quest for trustworthy audit, there is one overlooked element of a pragmatic solution to audit failures: Send in the Elders!
This is another of accounting’s blindside – the unremarked affordances of elderhood. In the face of talent shortage, a speedy way to build up the stable is to recall spry audit elders. Any keen observer of accounting and audit profession would see evidence of generational gap in talent. The existence of that gap partly explains why we have had more audit failures in recent times than we used to half a century ago. For example, PCAOB continues to find evidence of failure of basic audit procedures in modern audit. That was not part of the major problem with earlier audit vintage.
Let us not forget that auditors are experts. The making of experts takes time and there can be no short cuts – you cannot mass-produce world-class experts. It is a patient process. Hitz (2021)[1] tells us that
“it is evident that our human core – our inner resources for thought, reflection, and contemplation – cannot be nurtured by mass education … it must be nurtured person to person …” and patiently.
Noting that education and learning need more than discipline and social incentives, she asserts that they also need
“the guidance of wise elders who know what lies along certain pathways, ….”
Audit is a complex field that needs pluripotent skills which take time and diversity of experience to develop. Unlike other employees in an organization, the auditor must understand all aspects of the business. By studying the business processes of each function in the organization to understand their control needs and be able to audit them, the auditor broadens his view more than any other in the organization. It is the best example of deliberate practice leading to eclectic expertise. The diverse wisdom of audit elders, gained over the years cultivating consilience as they rove the profession and the market, and the internal systems of organizations, literally confers pleiotropy on them so they can deal with different aspects of the organization solving problems with tacit knowledge. It is a huge resource for training the next generation. As part of the natural process of their work over a maturity spectrum, auditors stroll the cloisters of organizational systems like “rational flaneurs” (Taleb, 2012),[2] with “pragmatic muddling through,” (Power, 2013 ),[3] learning in agile formative ways that yield tacit knowledge and wisdom. In the process as they age, they develop a haecceity on the basis of which audit has long acquired compelling esteemed dignity as consummate “gardener of governance,” (Lenz & Jeppesen, 2022).[4] Hence, the mantra “Audit is Trustworthy” has a sentiment with profundity that resonates with society, shaken though by fleeting audit aberrations but never nullified. Unbeknownst to many, this sublime haecceity is the reason why auditors are the best advisors, literally nonpareil, and why despite regulatory attempts to hive advisory services from auditing, clients cannot decouple their appetite for the auditor’s advisory voice from audit services. Audit elders sharing such experiences with the younger generation will make them strong for difficult audit conversations that might result in audit failure if not handled with the tacit wisdom embedded in elderhood.
Tacit knowledge and/or wisdom is embedded in the individual expert in such a way that it is not easy to codify, express or transfer. Experts (Goffin & Koners, 2011)[5] have determined that to gain from the tacit wisdom of elders, the younger generation must instructionally interact with them person to person in trusting relationships that educe the elder’s wisdom and imbue it in the student. And it needs to be through deliberate practice shadowing the elders, not by theorizing and storytelling or mere reading of related literature (Schmidt & Hunter, 1993).[6]
According to leading expertise psychologists (2007),[7]
“Consistently and overwhelmingly, the evidence showed that experts are always made, not born. … The journey to truly superior performance is neither for the faint of heart nor for the impatient. The development of genuine expertise requires struggle, sacrifice, and honest, often painful self-assessment. There are no shortcuts. It will take you at least a decade to achieve expertise, and you will need to invest that time wisely, by engaging in “deliberate” practice—practice that focuses on tasks beyond your current level of competence and comfort. You will need a well-informed coach not only to guide you through deliberate practice but also to help you learn how to coach yourself. Above all, if you want to achieve top performance as a manager and a leader, you’ve got to forget the folklore about genius that makes many people think they cannot take a scientific approach to developing expertise.”
The journey to expertise is not necessarily tortuous; it is certainly challenging. Elderhood makes it easy to navigate productively. Auditing will benefit from recalling and recruiting experienced professionals from retirement to help in training the younger generation and effecting generational transfer of practical wisdom. We tend to think that retired professionals are decrepit hulks and less useful, so we undervalue their affordances. They are not doddering decrepit souls, they are hidden treasures, just to be used differently. According to Conley (2018),[8]
“the wisdom of the older people is one of the few natural resources globally that is increasing, not declining.”
He wants our brave new world to take note of this fact, so it does not continue to be unremarked in our society. As quoted by Conley, Cicero once said,
“it is not by muscle, speed or physical dexterity that great things are achieved, but by reflection, force of character, and judgment; in these qualities old age is usually not only not poorer, but it is even richer.”
Conley also quoted Ken Dychtwald to emphasize the usefulness of elderhood at work:
“… I am convinced that many corporate blunders and well-intentioned misdirections could be avoided if there were a better blend of the energy and ambition of youth and the vision and seasoned experience of age.”
Surely, the presence of mellowed elders will help reduce audit failures. Dychtwald echoed the recognition in Christian spirituality that elderhood is a treasure: “The glory of young men is their strength, And the splendor of old men is their gray hair.” “So with old age is wisdom, and with length of days understanding.”
Generational transfer of wisdom happens when we appreciate the grace of elderhood, treat elders with honor and deliberately exploit the affordances of their tacit mellowed wisdom. The prowess of youth alone cannot bestow wisdom on the young generation of accountants and auditors.
Lester Thurow (2000)[9] reminds us that
“human skills only grow if one generation teaches the next what it has learned so that the second generation can devote itself to expanding existing knowledge and acquiring new skills rather than to rediscovering and relearning what the previous generation has already mastered. Self-education is inherently limited. … Progress requires systematic social processes for educating the young.”
This generational transfer of wisdom and skills is a wealth-building fundamental without which accounting/auditing cannot help society strengthen and sustain its wealth pyramid. Unfortunately, generational transfer of knowledge, wisdom and skills has been disrupted in recent times by aliteracy, irrational, immoderate attachment to electronic devices and the social media making it difficult to prescind from distractions to learn, and most recently by the Great Resignation. We need generational cooperation now to make the change we want to happen. Instrumental rules and policies are needed at institutional levels to engender generational transfer of wisdom – it needs to be a decision, not a chance.
I am yet to see any concerted effort in the industry to bring accounting and auditing elders back to work. They may not have the chips, bits and bytes of language and techies of Gen Z, but there is something about elderhood and learning and decision making at work that will benefit the industry in a time like this. And because accountants and auditors have exceptional self-discipline you are likely to find super-agers among them. All that needs to be done with them is structure their work schedule differently in status-agnostic positions where they function as generalists teaching and supporting the younger generation with nuanced minutiae of accounting/auditing wisdom.
Research in cognition continues to confirm that older people do superior inductive reasoning,
they “are less likely to rush to judgment and more likely to reach the right conclusion based on the information;[10] older people have better judgment, are better at making rational decisions, and are better able to screen out negativity than their juniors.[11]
This is the differentiating audit mindset that the profession needs at this time, and it must be generationally transferred to the younger ones, it is a development fundamental.
In the face of talent scarcity in the accounting and auditing profession, we should seriously consider bringing our elders back to work. Many of them are sufficiently spry to bring their affordance to the battle. They can be given modified roles according to their individual circumstances in areas such as person to person training in audit procedures, judgment and decision making in financial reporting and audit communications.
Accounting/audit elderhood is an undervalued treasure in our profession today. We can make a difference by exploiting it.
REFERENCES:
[1] Hitz, Z. (2021). Lost in Thought: The hidden pleasures of an intellectual life. Princeton, NJ: Princeton University Press.
[2] Taleb, N. (2012). Antifragile: Things that gain from disorder. Random House.
[3] Power, M. (2013). The Audit Society: Rituals of Verification. Oxford University Press.
[4] Lenz, R., & Jeppesen, K. K. (2022). THE FUTURE OF INTERNAL AUDITING: GARDENER OF GOVERNANCE. EDPACS, 66(5), 1–21. https://doi.org/10.1080/07366981.2022.2036314
[5] Goffin, K., & Koners, U. (2011). Tacit Knowledge, lessons learnt, and new product development. Journal of Product Innovation Management, 28(2), 300–318. https://doi.org/10.1111/j.1540-5885.2010.00798.x
[6] Schmidt, F. L., & Hunter, J. E. (1993). Tacit Knowledge, practical intelligence, General Mental Ability, and job knowledge. Current Directions in Psychological Science, 2(1), 8–9. https://doi.org/10.1111/1467-8721.ep10770456
[7] Ericsson, K. A., Prietula, M. J., & Cokely, E. T. (2007). The making of an expert . Harvard Business Review, (July-August).
[8] Conley, C. (2018). Wisdom@work: The making of a modern elder. New York, NY: Currency, an imprint of the Crown Publishing Group.
[9] Thurow, L. C. (2000). Creating wealth: The new rules for individuals, companies, and countries in a knowledge-based economy. London, UK: Nicholas Brealey.
[10] Harvard Health Publishing. (2015). Why you should thank your aging brain. Retrieved August 1, 2023, from https://www.health.harvard.edu/mind-and-mood/why-you-should-thank-your-aging-brain
[11] Harvard Health Publishing. (2019). The upsides of your aging brain. Retrieved August 1, 2023, from https://www.health.harvard.edu/womens-health/the-upsides-of-your-aging-brain
