The tumultuous events of the last year or so have revived discussion of the 'expectations gap' between the level of assurance that audit can actually provide and what many investors and the wider public think it can provide.
This is an issue that the profession would be foolish to duck, especially in the current climate, but it is not an easy one to address. Anyone charged with such a challenge faces an uphill struggle to persuade people that audit cannot, in fact, give the cast-iron guarantee of the veracity of a company's financial statements. It's not so much that people necessarily find this difficult to understand, although accountants could probably help matters by coming up with a concise and universally accepted definition of what an audit actually is.
The main problem is that people simply don't want to hear that they can't rely on an auditor as a guarantor against risk from whom they can automatically claim compensation should something go wrong with their investment. People not hearing what they don't want to hear is perhaps the most fundamental problem of today's corporate culture, and has contributed in an unmeasurable but undoubtedly significant way to this year's financial scandals.
As anyone who works for a company is only too well aware, such behaviour is extremely widespread, and has spurned a similarly damaging mirror behavioural trait; only telling people what they want to hear.
It's an effect that snowballs with devastating consequences. Middle managers, under pressure to meet targets or because they know their superiors will simply not listen to anything negative, will exaggerate estimatesof what they can deliver. Their bosses inflate this already exaggerated version of events when they talk to the boardroom, and the company's directors add their own spin when they are talking to investors and the City. Expectations are therefore built up beyond reality at every level, resulting in a huge shock when the reality of what is actually going on starts to filter through from the factory or office floor.
Jurgen Dormann, chairman of beleaguered engineering giant ABB, lamented this phenomenon recently as he revealed a profit warning. 'I really have to sort out what is wishful thinking and what is reality,' he was reported as saying, as he promised to reform the company's internal reporting structure in a way that would encourage more openness internally.
Members of the profession working in both business and practice have been encouraged to make an effort to become more commercial over the last decade or so. Sadly, a few have interpreted this as adopting the spin and hype-driven forms of corporate behaviour described above.
Accountants have significant influence both in an advisory capacity and in companies - our survey on p 17, for example, reveals that more than one in five of FTSE 100 finance directors are qualified accountants - and are perfectly placed to take the lead in sound corporate behaviour.
Being commercial is not about shutting your ears to bad news and telling all and sundry what they want to hear. It's about telling it how it is and finding realistic ways of moving to where you want to be.