Are we waiting for a ‘Kodak moment’?

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A “Kodak moment” brings one of two meanings to mind. One is about that extraordinary moment worth capturing. The other is about successful organisations, wedded to the status quo, unwilling to risk and innovate and thus fading away, just like an old photo.

The keynote address at the AAA Audit Section Luncheon was a double ‘Kodak moment.’ Stephen Chipman, the CEO of Grant Thornton US delivered an extraordinary speech that captured the imagination of the audience with his inspirational ideas and challenging questions on whether the audit profession is waiting for its ‘Kodak moment’.

We should put all of these great ideas on the table and debate them because we can’t move forward pretending that the profession is in great health

One of the first key comments of the speech resonated with our own AuditFutures philosophy. We should not pretend that we have all the answers – in fact, we should start by finding the right questions for the debate. But unless we address these difficult questions and embrace bold change, the audit profession will be left with an “idealised past”:

The world is full of people whose notion of successful future is, in fact, a return to the idealised past

Stephen Chipman spoke with passion about his profession and its new and exciting future. His eloquent speech gave a lot of food for thought and called for action. Three messages emphasized the urgency of the debate that AuditFutures is leading:

 
“Trust may not be dead, but it is at least on life support”

The financial crisis and recent scandals have exacerbated the erosion of public confidence and trust in business. In addition to negatively framing the public debate, they have revealed multiple problems undermining the foundations of our civic society. We cannot see a prosperous future in an environment of declining confidence in professions and institutions whose very purpose is to protect and provide trust for the betterment of all. The erosion of trust in the traditional pillars of our society “cuts to the heart of our profession and the charge we passionately lead every day with students, clients and investors alike.”

If we don’t want to continue losing market’s faith in us, the speaker argued, we have a responsibility for today. And we need other market participants to hear us on those issues to drive change that will make us healthier and more effective.

Yes, there is an expectation gap. Yes, the litigation and liability concerns of the accounting firms in the U.S. are very real. But we cannot hide behind those issues and ignore the changes we need to drive and embrace… We have an opportunity to stop the erosion of public trust by engaging in transparent, public debate about where we are as a profession and where we must go in the future.

 
“The information delta is widening and the demands for
quality assurance are growing”

Stephen Chipman invited us to renew our commitment to these two core areas around information. We need a robust dialogue on the nature of the information for which we provide assurance and the quality of the assurance that we provide. He shared examples that demonstrate that only a fraction of the information, subject to independent audit, is used by investors to make decisions. We have to think not only about the quality of the information, but also its quantity and different channels for entering the market.

The information investors now have at their disposal is so much more than we have the mandate to address in our purview as auditors. And that information delta is widening, meaning that the fraction of audited financial information – our current charge — will continue to shrink in significance and relevance.

 
“Generation Y and Millennials are voting with
the professional choices they make”

Many voices have expressed the opinion that we are not attracting, retaining and educating accounting students in a sustainable way. The speaker challenged the academia and the professional firms for a greater level of cooperation to inspire “world-class, globally-minded, diverse accounting students who are intellectually curious and capable of broad, critical thinking.” This passionate pursuit would require that we embrace the new challenges and adapt to the demands of these exciting, ambitious, high-minded young professionals who want more than a job.

This theme has surfaced many times during our AuditFutures University events. It is a fact that Generation Y is looking for a higher calling, for a profession with a meaningful and social purpose. They want to be a part of something that brings real and positive change and benefit to people. They want to be proud of their profession.

Of course I would argue our profession offers that sense of greater purpose, a high-minded intellectual challenge. But we must look ourselves in the eye and decide how we want to define our future– and display the dynamism that attracted many of us to the profession in the first place… And I’d ask everybody in this room to dig deep and rekindle our commitment to the virtuous and inspirational calling that binds us all.

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I think the most important message from Stephen’s talk is that we need to shift our thinking and actions to a new paradigm of self-responsibility. By taking responsibility for the dynamics of change, the auditing profession will rebuild trust in itself and business generally and reaffirm its public interest role:

Let’s take our core value proposition of trust, and together build a successful future for the profession that does not cling to an “idealised past”