| Report of the President
Timothy B. Bell |
|
Let me begin by saying
thank you to the members of the Auditing Section for giving me the
opportunity to serve as your president. I pledge that I will do my
very best to provide you with effective leadership; the kind of
high-quality leadership we have enjoyed from our past presidents and
that has made our Section one of the best of the American Accounting
Association sections. On behalf of the Auditing Section, I also
would like to thank the following outgoing officers for their
outstanding service and exemplary leadership: Jane Mutchler, Past
President; Barry Cushing, President; Dennis Schueler, Vice
President-Practice; and Lisa Koonce, Secretary. In addition, I would
like to welcome aboard three new members of our Executive Committee:
Karen Pincus, Vice President-Academic and President-Elect; Jerry
Sullivan, Vice President-Practice; and Jean Bedard, Secretary.
Progress on the Section’s Strategic Management FrameworkThe Section’s Executive Committee held a strategic planning retreat at the Midyear Meeting in Mesa, Arizona, in January 1998. By the end of that Mesa meeting, a proposed strategic management framework for the Section had begun to materialize. The Executive Committee met again just prior to the AAA Annual Meeting in New Orleans to further evolve the proposed framework. During the New Orleans meeting, consensus was reached on the contents of the framework’s mission statement, shared values, organization-wide measures of success, distinctive competencies, and critical activities and initiatives. Also, there was considerable discussion about specific measures that could be used to monitor the effectiveness of our activities and initiatives at achieving our distinctive competencies.Several issues surfaced during the strategic planning meeting in New Orleans. First, there was a general recognition that the primary role of our organization, its reason for being so to speak, centers on networking and connectivity. By providing venues like the Midyear Meeting for people to come together and share ideas about research, teaching, and current developments in practice, and through the Section’s publication and dissemination of research papers, educational materials and monographs, the Section is a vehicle for connecting people to people, and people to ideas, thereby, fostering learning and adaptation. In short, the primary role of our organization is to promote and facilitate interactions among its members, and members of the professional community at large, to accomplish our mission of fostering excellence in the teaching, research, and practice of auditing and assurance services. Second, members of the Executive Committee recognized that because the Section does not have a full-time support staff, it would not be practical to implement a comprehensive annual performance measurement system. However, we agreed that periodic measurement projects like a member satisfaction survey would be beneficial. Third, we recognized that because our organization’s leadership so frequently turns over, our strategic management process needs to be flexible enough to accommodate the adoption of new strategic initiatives on as frequent as an annual basis. Fourth, there was discussion on whether the Section’s name should be changed to include the term “assurance services.” The tentative conclusion reached by the Executive Committee on this question is that, because a) the name “Auditing Section” has considerable brand equity, b) external and internal auditing continue to be the profession’s core services, and c) forays into other assurance services are early and have not yet become well established, we should not change the Section’s name at this time. However, we did tentatively agree to incorporate the term “assurance services” into our mission statement and other elements of the strategic management framework. As discussed below, the Executive Committee agreed that we need to elicit feedback from the membership on this important question. Now that we have made significant progress toward our development of a strategic management process for the Section, the next step is to elicit feedback and suggestions from the Section’s membership. Sometime during Fall 1998, portions of the proposed framework will be posted to our web site. Also, these portions will be distributed electronically to all Section members for which we have email addresses. Members will be encouraged to provide feedback and suggestions to me via email. Next, I will process the feedback and circulate suggested changes to our Executive Committee members. As a group, we will decide what changes should be made to the framework. I will present the revised framework at our Midyear Business Meeting in Atlanta, and facilitate an open discussion on its merits. Subsequent to that meeting, the Executive Committee will determine what are the remaining steps to bring this initiative to completion. My Strategic InitiativesOur strategy deliberations have helped me to develop the central theme of my initiatives over the upcoming academic year. That theme draws on the combination of four of the seven proposed shared values we developed during our strategy meetings: our members’ commitments to (1) the integration of high quality research, education, and practice, (2) sharing knowledge and open communication in a learning community, (3) visionary thinking and innovation, and (4) close professional relationships with the practice community. In my opinion, the hallmark of our organization in the past has been its effectiveness at initiating and executing activities centered on the remaining three of our proposed shared values: our commitments to (1) rigorous, leading-edge auditing and assurance services research, (2) rigorous, leading-edge auditing and assurance services education, and (3) integrity and high ethical standards. I believe that by focusing on a set of new activities and initiatives centered on the combination of the other four shared values, we can carry out our mission even more effectively.Throughout the 1970s and 1980s, the profession focused much of its R&D effort on fine-tuning its audit production processes—processes directed primarily at the selective testing of the details of accounting transactions—to enhance efficiency. Such fine-tuning is exactly what one would expect in a mature market with members that produce a commodity product or service. During the 1990s, the profession has embarked on what I believe is a major transformation of its core service. As we have heard over and over again, the primary catalyst behind this transformation is the quantum leap in communications technologies that are transforming the very nature of human interaction. Organizations are employing new technologies to connect electronically the various information activities embedded in their business processes, and to connect electronically with agents outside of the organization, such as suppliers, regulators, and customers. These electronic connections enable organizations to reduce frictions that impede the flow of information (i.e., increase efficiencies), and enable organizations to reach beyond local markets to a global market. Electronic connectivity presents several challenges to the external auditor. First, it increases the speed and frequency of changes within the global web of economic activities. Second, it threatens the very viability of the plethora of entities whose primary roles have been various forms of information intermediation, i.e., forms of connectivity that are rapidly becoming obsolete. Third, the traditional paper-based details that have served the external auditor as documentation supporting the accounting for routine business transactions, i.e., traditional forms of “corroborating evidence,” are rapidly disappearing. A more dynamic world-wide economic system, coupled with the disappearance of paper audit trails, has prompted assurance providers to shift the focus of their R&D efforts away from further fine-tuning their selective transactions-testing processes and toward the development of new approaches for evaluating the representational faithfulness of the entity’s financial statements— approaches that guide the auditor’s development of in-depth knowledge about client business risks and the reliability of the business and information systems used to manage those risks. These significant changes that are taking place in our economy and in our profession pose new challenges to our organization and its membership. Assurance process reinventions of the magnitude we are seeing in our profession strengthen the interdependency between the academic and practice arms of our profession. Practice is heavily dependent on our institutions of higher education to teach the new competencies required to execute its new assurance processes effectively. Also, academic scholarly research focused on emerging assurance technologies is needed. Such research will help the profession understand the strengths and weaknesses of its new assurance methods and highlight opportunities for improvements. And, the very process of performing research will serve an important faculty-development role. Academics, on the other hand, should be engaged more directly in these transformations, even as they are taking place, in order to be in the position to make informed decisions on a timely basis about possible value-enhancing revisions to course content and curricula. Timely adaptation of our education model to reflect changes in the fundamental concepts that define our profession’s role in society, and the underlying changes in the competencies needed to effectively serve that role, enhance the viability and vitality of the profession. Creating a more viable and vibrant profession in turn creates a more viable and vibrant education system and increases the amount of resources available for allocation to basic research and curriculum innovation. Also, academics would benefit from being engaged in the transformation process if they are to develop innovative research approaches directed at advancing knowledge of fundamental concepts and theories of assurance. To create a more vibrant profession for the 21st century, I believe that the academic and practice communities must develop more productive ways to work together. During this academic year, I plan to initiate Section activities aimed at fostering productive interactions between the academic and practice arms of the profession. I plan to appoint a Section “Outreach” Task Force whose charge will be to identify new strategies for how our Section can better foster engagement between our academic members and members of the practice community. I am not talking here about inviting practitioners to make presentations at Section meetings, or inviting them to attend research presentations. These are one-way flows of information that, in my opinion, have not been very “engaging” for either academics or practitioners in the recent past. Rather, what I am talking about are new ways the Section could foster the reaching out by its members to engage practicing professionals in productive joint ventures dealing with emerging issues and problems. For example, the section could convene a group of leading thinkers from practice and academe to write a set of essays on Risk Management–Assurance and Disclosure Issues. Also, I have asked our Auditing Standards Committee to develop a proposal for a model, similar to the one used by the AAA’s Accounting Standards Committee, under which the ASC periodically would write and publish commentaries on proposed standards, both U.S. and international, or on other emerging issues in Assurance Services. These commentaries would present the informed opinions of our committee members on the issues at hand, with such opinions being grounded in prior research findings where possible. I will report on the progress of these initiatives and related initiatives at our Midyear Meeting in Atlanta in January, 1999. I ask you, the membership, to communicate your ideas to me about how the Section can better foster productive collaborations between academics and practicing professionals. Please send your suggestions and ideas to me at tbell@kpmg.com. Other Section BusinessDuring the annual meeting in New Orleans, the Section’s Executive Committee had two very productive meetings. Here are some highlights from these meetings.
Timothy B. Bell President 1998–1999 |