Firefighting, saving lives and the value of performance audit

By Mike Scott, Director Performance Audit, PASAI

I volunteer as an Operational Support Firefighter in my small, rural hometown in New Zealand. I am one of nearly 12,000 fire and emergency volunteers across the country. Last week, an independent valuation of the contribution of New Zealand’s volunteer fire force was published. The report, Hidden in Plain Sight, estimated the annual economic contribution of volunteers to be $823 million.

This got me thinking about the value of performance audit and how being a performance auditor isn’t as different as it might seem to being a firefighter.

Being capable, timely and well-planned, independent critical thinkers, part of a high-performing team and making a difference in people’s lives by leaving a situation better than we found it, are just some of the similarities I see.

Being capable

I train with my brigade for two hours on a Monday evening to build and maintain our capability to respond when needed, not dissimilar to how performance auditors build and maintain their professional competency through training, experience and continuing professional development.

Being timely and well-planned

When the siren sounds and the brigade responds to a call for help, we get to where we are needed as quickly as possible. However, we don’t all rush inside burning buildings as soon as we’re on site. The first thing that we do when we arrive is assess the situation, decide our objective and plan how to achieve it. Timeliness and planning are no less critical for performance audits.

You may not be putting out a fire or rescuing someone trapped in a car, but setting a clear objective for a performance audit focused on improvement, and planning a sound, evidence-based approach to complete the audit, are key to a successful outcome.

Supreme audit institutions should choose their audit topics considering how their timing is likely to create value and have impact. To be relevant and make a difference, the audit report needs to be issued on time to make the information available for use by the legislature, the management of the audited entity and other interested parties.

Being independent critical thinkers

In my view, the quality of the brigade’s response to a situation is determined in large part by the independent thinking and objective judgements made on the ground, based on the presenting facts and circumstances. The firefighter and performance auditor share this ability to apply their independent thinking and judgement to come to an informed opinion about the current situation and what is needed to improve it.

In the case of a performance audit, this opinion is often about how well public funds are being used to deliver outcomes for people and what improvements are needed, where relevant. Performance auditors may not fix the situation directly like firefighters but their recommendations influence others to act.

Being a high-performing team

The teamwork is one of the things that I enjoy most about volunteering. Every member of the brigade responding to a situation is focused on the outcome, makes a constructive contribution, trusts one another, listens, shares ideas and does what is needed, without rivalry or self-interest.

Performance audit is also about being a high-performing team. Added to the attributes I see when the brigade responds, performance audit teams that value diversity of thought, are open to different viewpoints and who constructively challenge one another, add greater insight and value through their work, in my view.  

Making a difference by leaving a situation better than we found it

Ultimately both firefighters and performance auditors improve a situation by what they do. Firefighters may save people’s lives more directly, but performance auditors can have a huge impact in indirectly enhancing people’s lives. For example, the recommendations they make can lead to better health, education, housing and other outcomes for people.

So, all you performance auditors out there, don’t underestimate your worth. Speaking as an auditor, I can say that I think we tend to.

You don’t just save the public money; you safeguard how well people are served by the use of public money.

Auditors and firefighters alike are heroes!

Performance audit report by Office of the Auditor General for Western Australia

How a culture’s ‘power distance’ affects auditing

By Luke Eaton, Communications Advisor, PASAI

Across the Pacific region the power distance dimension of culture varies. This refers to the relationships between people perceived to have different ‘statuses.’ In places with a low power distance, interactions are usually less formal and challenges to authority are normal and even expected. In places with a high power distance, there are greater sensitivities around rank.

A mysterious crash

It was a rainy night in Guam, when, in 1997, a perfectly good plane flown by well-trained pilots crashed into the top of a small hill near the airport. Hundreds of people – nearly everyone on board Korean Air Flight 801 – died on impact. I mention this because power distance probably explains this tragedy.

The plane’s cockpit voice recorder later revealed the co-pilot and flight engineer seemed reluctant to act despite their concern the captain was still relying on the plane’s autopilot function while steeply descending on that rainy night. There were several seconds of indecision after alarms sounded in the cockpit but when the captain finally turned off the autopilot it was too late. [1]

The crew members were behaving in accordance with hierarchical Korean culture and deferring to seniority. The failure to question the poor judgement of the captain was, in this and other similar cases, a fatal mistake. [2]

Implications of this cultural dynamic on audits

If you are in a high power distance culture, you probably already know the various protocols around greeting people. However, as an auditor (or fraud investigator), it is especially important not to let the seniority of auditee staff influence your careful examination of the information they provide. If discrepancies appear, you may need to overcome ingrained habits of deferring to authority. You should also pay attention to how this aspect of culture may affect an assessment of fraud risk.

An INTOSAI CBC blog post [3] put forward that auditors in a high power distance culture tend to adhere closely to procedural checklists, seeking the approval of their superiors. This comes at the expense of innovation in evidence gathering. They are also less likely to perceive power as a source of corruption, taking less scepticism into audit engagements.

Fostering a culture of review

On paper, a SAI might have the necessary powers to demand certain documents of interest or be entitled to be provided diligently prepared financial statements by a well-established deadline. However, all too often audits succeed or fail to make a timely impact based on the willingness of auditees to cooperate with the SAI. This is where good communication skills might be a benefit.

Ideally, auditees would readily understand that audits are a gift. However, many treat audits like an unwelcome provocation. It may be worth spending a little extra time explaining the benefits to the auditee and the public at large, of having a financial management system with this self-improvement function. You are like a mechanic looking under the hood and advising which parts need a tune up for a smoother ride. Perhaps you can think of a better comparison.

Of course, in the unreasonable absence of a paper trail to audit, there would be good reason to sound the alarm of high fraud risk.

SAIs should always strive to serve as model public sector agencies. On the topic of audit quality at the recent Congress, we discussed the importance of having a culture of review, challenging assumptions and continuous feedback for improvement. Quality doesn’t happen by accident. It needs systems in place and a ‘tone from the top’ that quality matters and that review is welcome. A SAI’s reputation is earned by the quality of its products and demonstrating a willingness to itself be transparent and open to improvement.

Sometimes it takes bravery to follow or give voice to your intuitions. An environment that welcomes a diversity of perspectives certainly makes the process easier. In either case, we need to avoid crashing the proverbial plane.

References

[1] Is culture a factor in air crashes? Guam probe may raise touchy issue
Don Phillips, Washington Post

[2] Could Malcolm Gladwell's Theory of Cockpit Culture Apply to Asiana Crash?
Brian Clark Howard, National Geographic

[3] Power distance cultural dimension among auditors
Dr Sayed Alwee Hussnie Sayed Hussin, SAI Malaysia, Director of Policy and Internal Relations