The Contribution of Michael Power - Essay Example

? Auditing according to Michael Power Since early 1980s, there has been an explosion of auditing activity both in the UK and North America. Recently, auditing has expanded to different other fields like medical auditing, technology auditing, environmental auditing and many others in different parts of the world (Ferlie, 2007326). There is also a stern debate across the academic disciplines about modern public management. The Audit Society argues that the progress or explosion of auditing has its roots in political demand for accountability and transparency. While others argue that the causes of audit explosion can be categorized on the rise of quantity assurance models of organizational control, the rise of new public management or the increasing demand for accountability and transparency. However the arguments go further to claim that these assumed causes need further support and research to express that the audit expansion is not a UK phenomenon (Power, 2002:183). This paper will review the basic arguments of the of The Audit Society and reconsider the causes and consequences of the audit society. Introduction Financial auditing is a statistical practice which seeks to draw conclusions from a limited inspection of documents. These documents can be written representations or budgets. More so, the inspections can be on oral testimony and direct observation. Prior to the past traditional methods of auditing in the UK, auditing began to modify by acquiring a new broader context. This was the reason because, audit began to play a new task in both the political and the economic sector. From this point, auditing became broader and a more significant tool in the society (Reuchars, 2004:76). Causes of Audit Explosion During the 1980s, the public sector institutions were characterized by financial constraints. Due to this factor, auditing and inspection became highly valued and important tool of change. National Audit Office and The Audit Commission became outstanding forces in government by playing an evolving and intricate constitutional role in different ways. In the late 1990s, the pressure for change increased as well as the demand for inspection and monitoring finances (Power, 2002:183). In another word audit explosion was driven by political demands on behalf of the citizens, patients, taxpayers, students and others. The reason behind this force was to provide greater accountability and transparency of service by both the public a and the private sector. The other pressure that forced the explosion of auditing was the rise of quality assurance practices and related transformations in regulatory style. Consequences of Auditing The introduction of auditing as an agency of organizational change has no measured consideration of benefits as well as possible dysfunctional effects. Although cost compliance has been introduced, audit and related monitoring ideas continue to be understood critically. In this respect, it is reasonable to suggest that auditing is an ideology driven for disciplining and controlling both the public and the private sector, yet it is not because auditing is not an instrument of genuine accountability. Therefore, to analyze the consequences of auditing, it is important to focus on the development of understanding auditing deeply (Powe, 2004:27). This broader understanding of auditing is the performance measures and other forms of accounting which provide an auditable front stage of an organization. The first consequence of auditing is that many performance indicators are produced but are not edited. Such facts are evident, and the UK Audit Commission is actively shaping these performance measures to enable genuine audit and inspection. However, just because a performance measure is not audited does not mean that it was not designed with potential audibility in mind. Another consequence is the growing population of auditees. This fact brings out the evidence that shows how different games of compliance creativity are played around the audit process. This creative games frustrates official intensions and leads to dysfunctional behavior in both the private and public sectors (Fitzpatric,2001:151). Secondly, newly established editing systems have damaged local cultures of first order practice. This means that certain local activities that are valued locally are not represented by official systems or are lost in the general concept of “goodwill”. These cultural damages normally happen in the medicine and teaching sector (Fitzpatric, 2001: 151). However, if auditing processes become separated from the main organizational activities, these effects could be minimal. Hence, the audit process becomes an expensive but harmless ritual which is very essential for external legitimacy. Analysis The concept of audit society was created in advance of detailed experimental work. This means that many unresolved issues and problems still exist and below is the analysis of two main issues affecting the audit society. The first unresolved auditing problem is the relation between transparency, organizational democracy and auditing (Tria & Valloti, 2012:22). Being made to account is not the same as being more transparent or publicly accessible. Others argue that some audit processes discharge certain styles of accountability specifically to avoid transparency. However, what appears to be vital is less the exposure to stakeholders assured by the language of accountability. Another audit paradox involves the character and periodicity of audit and inspection reports, and the level to which the reports support deliberative processes. It should be understood that audit reports are not designed to continue stakeholders dialogue and that it is important to trust the auditors, hence granting them independence becomes a factor to consider (Arwinge, 2013:3). The reason behind auditor freedom is because, stakeholder involvement in the auditing process of whatever kind brings anxiety to the auditor ending up to unstandardized reporting. On the other note, it is suggested that The Auditing Society is a less trusting society. This is a fact because most parties don’t trust their institution and further investigations are critically required. For instance, teachers and doctors claim that evaluation processes have achieved the opposite by eroding the informal goodwill and making individuals develop new motivation around crude performance measures. Though the issue is being worked on, more effort is needed to eradicate the existing mistrust. Additionally, research is needed to address the implications of new auditing and inspection institutions for the audit society thesis. This is because, The Audit Society threatens an infinite relapse to the auditor as further layers of regulatory influence are created. This theoretical regress must stop somewhere, and further regulations are needed in different fields. The other thing that researchers should clarify is the definition of auditing. The mixed up definitions and understandings are brought about by the wide diversification of auditing fields. The reality of diversity is reflective, and despite reasonable attempts, the relationship between evaluation, editing and inspection remains unclear. The idea of audit consists of general and highly idealized elements and is used in a broad range of policy framework (Arwinge,2013:7). More so, the people that are called auditors and inspectors do many different things and clarification is needed to define the categorized individuals. On another note, activities related to audits are labeled as audits yet they are not. Therefore, labeling the activities related to audits as audits, brings the probability for them to obtain the idealized characteristics of audit over time. Hence, proper definitions and clarifications of auditing and its wide field needs more research. Conclusion The audit society remains relevant to the society despite the weakness and practical set of arguments. According to Michael Power, the whole audit phenomenon has loopholes that need to be redefined and amended to avoid misconception. More research is needed to bring out the real classification of the audit fields (O’Reagan, 2004:58). Additionally, research is needed to bring out the root cause of parties and institution conflicts. This is necessary because when the root problem is identified, the institutions will stop abusing the audit measures and the conflict between them and their parties will come to a halt. The stakeholders also need to exercise trust by allowing total freedom to the auditors, and the auditors on the other side should not abuse the granted freedom (Tria & Valotti, 2012:23). In short, modernization changes everything gradually and the more the modernization, the more the diversification of audit. This progressive pace does not match up because the society is growing fast and so is auditing, but the policy measures of auditing remain behind. Therefore,subsequent research is needed to regulate the audit policy measures so that the auditing processes catches up with the evolving times. Bibliography Arwinge, O. 2013. Internal control: A study of concept and themes. Heidelberg: Physica-Verlag. Deuchars, R. 2004. The international political economy of risk: Rationalism, calculation and power. Aldershot [u.a.: Ashgate. Ferlie, E. 2007. The Oxford handbook of public management. Oxford [u.a.: Oxford Univ. Press. Fitzpatric, M. 2001.The Tyranny of Health: Doctors and the Regulation of Lifestyle. Newyork:Routledge O'Regan, D. 2004. Auditor's dictionary: Terms, concepts, processes, and regulations. Hoboken, N.J: Wiley. Power, M. 2002. The audit society: Rituals of verification. Oxford [u.a.: Oxford Univ. Press. Power, M. 2004. The risk management of everything: Rethinking the politics of uncertainty. London: Demos. Tria, G., Valotti, G., Brookings Institution., & Scuola superiore della pubblica amministrazione (Italy). 2012. Reforming the public sector: How to achieve better transparency, service, and leadership. Washington, D.C: Brookings Institution Press. Read More