I would add that most people on this blog seem to be auditors – and as such they have a special view of the world of consulting. Their view is influenced heavily by shareholder value, regulations, standards and guidelines. Auditors are not true consultants so much as they are a service provider for those required to use them. Their value equation is a bit skewed by these influences — and I think that it becomes multi-variate in ways that are much harder to reconcile than a standard service provider/client relationship.

All of the firms pay lip service to quality and value but when push comes to shove, the most successful people in the Big 4 are incented to sell, sell, sell and someone else will grind through busy season.

If stabbing a fellow partner in the back in order to cannibalize their business development opportunity – well, the winner writes the history book.

I think that the arguement for value can best take hold only after there is a common definition of value.

And regarding the Andersen comment, the issue was not unique to them. If you follow this blog, you surely know that to be the case.

Recall, “That which moves us toward our goal(s) has value. The degree of value is determined by the priority of the goal and the extent to which we move toward it.”

I am writing about the problems created by a lack of common understanding of the tern “value”. We all want value, right?

A common and clear understanding of value should lead to an equity based engagement, where value added service is not requested.

JD – I am describing a relationship where unprofessional behavior could be avoided, and therefore litigation would not be considered. I disagree with ,‘’the root of this problem is beyond the control of auditors”. In fact, you have complete control. Stop the problem before it occurs by learning the client’s goals. If you find you have congruence with the goals fine, move ahead, if not disengage.

Tony- Move beyond those that portent to teach you. They are but the minions of those who cannot see beyond tomorrow. Their objective is to maximize today at whatever risk may come the morrow,,

At last, let me not forsake standards but let me belittle them. Without the standards of grammar and syntax language would be without meaning. Without music notes and rhythm there would be no Copan or Bach. And so it is for accounting standards. But standards only define the playing ground and rules.

While Beethoven might appreciate and understand Sting he is as different as USGAAP is to IFRS. In other words, standards do not make a solution. They only define the context of our existence.

Value is what you need to find!.

Without which, there is no differentiation between a low cost provider and you. Do you really want to do your negotiations with the Purchasing Officer?

I believe that within the firm culture, a key focus the firms need to emphasize is our duty (as auditors) to the public. This may be similar to your pledge of allegiance example, where it is only as good as our intent to carry it out, but it is not emphasized where I work (D&T). Everything is client service, deliver value to the client, etc., etc.

And of course those this is important. But I’ve never read a professional brochure or internal letter from the CEO, or had a training mentioning anything about our responsibilities as they pertain to the public, or our role in building shareholder confidence. We might not like that added responsibility, and some readers of this site might not want it, but it’s a fact of life and one of the reasons our clients pay big bucks to have a Big 4 opinion.

Giving assurance only has value in relationship to goal(s). The interested internal and external shareholders likely have different goals. However, it is the agent (management) who makes the auditor selection and reward decisions and all too often demands “value added” service because they do not see the value of assurance. That is why it is critical to understand management’s goals relative to the stated solution.

Each client will be different and I offer no universal solution. However, consider management’s value perception difference when providing a SAS 70 royalty audit under these two scenarios.

 We are required to do so by our content provider (solution based) vs.
 The report will ensure our continued access to the content (goal based).

If your client asks for value added service you have not yet identified the value (to the client) of the service you are providing!

While size does increase exposure, wrapping the profession in standards and regulations is like requiring a pledge of allegiance. It only gives an unwarranted sense of quality and value.

Search for value and you will find it.

Very true. However, the root of this problem is beyond the control of auditors.

As David helpfully states (along with a nice bit of history) in his comment “the value of an audit service is the assurance that an auditor provides that the financial statements are fairly stated”. This is well understand by most people but unfortunately for all of us, that is too often not the value that the market puts on an audit.

Instead, too many people behave as if the value of an audit were simply to have someone with deep pockets around to sue when things go wrong – regardless of whether there was anything actually wrong with the audit.

The solution? If auditor liability was limited to a small multiple of audit fees then the market might procure audit services based on the expected and desired rigour of the service rather than the deep pockets requirements.

Maybe the size of the firms is a detriment. Why should anyone work to build standards as Andersen did when all the work that one partner does to build standards can be undercut by another partner within the firm or another office within the firm? You have to get back to the situation where a firrm builds its practice by having standards, not by its lack of standards.