On the Frontlines: Navigating Awkward Audit Findings in the Public Sector
Blogs Carol Bellringer, FCPA, FCA May 25, 2022
I have spent my 40-year career in external audit, most of this time in the public sector in Canada. While I was an external auditor, our performance audit work was closely aligned with the type of work done by internal audit. Those performance audit reports were made public and "speaking truth to power" sometimes meant saying things that those in power didn't really want to hear — or at least didn't want anyone else to hear. Sound familiar?
Of course, audit reports should be balanced, sharing findings and conclusions about the good things (e.g., what did you find that met the criteria?), but also adding recommendations for how things that did not meet the criteria can be improved. However, while those under the microscope of audit will thank you profusely for the good things you found, they may push back or outright disagree with those things you found that resulted in recommendations for improvement. And while the media should cover the balanced picture, often only the negative findings make the headlines.
As auditors, we have learned to listen to the pushback and disagreement. Sometimes it's warranted. Perhaps there's an additional factor to consider or a negative tone in the report that suggests more than was intended. We have learned through experience to separate the new information requiring a careful edit from disagreement that simply attempts to deflect the auditor from the truth.
Add to this, a situation where sometimes the public sector auditor is required to — or may choose to — look into the actions or conduct of their "boss." In my case, auditing my boss would mean doing an audit of the elected officials themselves. There were occasions when I had to do that, such as when I had to conduct audits of members' expenses, for example. As an auditor, it took every diplomatic skill I possessed to run the draft report past an angry "boss," often for minor issues, but which were felt personally.
There were safeguards in legislation that prevented government, or an angry individual, from retaliating against the office of the auditor general. For example, as a provincial auditor general, it took an all-party agreement to appoint me, and a large percentage of the vote was required to remove me. Further, an all-party committee approved the audit office's annual budget. We also had freedom from most government rules and regulations. But even legislation can't prevent those changes in relationships that result from such an audit. Rebuilding trust takes a long time or may never be recovered after such an audit.
When it comes to negative audit findings, here are a couple of tips from personal experience:
- Let the person know as soon as you can about a negative finding — don't wait until you are clearing the final report.
- Explain the importance of the finding. It may be obvious to you, but the person may not realize why they should have done something differently.
- Don't get emotional. They aren't there to comfort you; you have to do what you have to do.
- Don't back down if they push back without any justification.
I will close this article with my personal reflections on the importance of a structure that ensures that those you report to (individually or collectively) are NOT themselves a subject of your audit work. They should be subject to someone's scrutiny, just not yours!
It is important to have a trusting relationship with those you report to. They can help influence the positive impact of your work. If you have ever been in the position of needing to report something negative that involved a "boss," you will know that the relationship will never be the same again. The answer, of course, is not to avoid that report — but to the extent that you can, make sure the system doesn't put you into that position — before it happens!