5 Reasons Clients Ignore Auditor’s Advice

Rob Berry: 00:00:28

Welcome to audit bites, the show where we give you bite sized chunks of information and education to help you excel in your art career. Join our host, Robert berry as we tackle another tough auditing topic this week.

Rob Berry: 00:01:00

All right, friends, welcome to Episode Two of audit bites. arbeid gives you small bite sized chunks of information and training. It is the first very first live show dedicated to auditing and guess what? You can get CPAs to Oh, wow, exciting go to go to audit bites.com. Today, we have a really interesting topic. Today's topic is fire reasons clients ignore auditors. Now, I'm going to pause for just one moment and give people a chance to come in because the first LinkedIn stream well it bombed out in an error. I don't know how that happened. But LinkedIn gave me an error message maybe because they knew that I was gonna say something controversial. Who knows? So I'm going to give people a chance to come in. And I see Heather, you made it. Thank you, Heather, for showing up today. And my friend Joe is here. Hey, Joe. So again, this is audit bites. Episode Number two, five reasons. Clients ignore auditors advice. So now, while we're sitting here, let me meaning when that happens, though, because if you think about it, you do a bunch of audit work. You spend months in their area, you come out with some really good recommendations because you've talked to people and now they ignore everything that you say. I just want to know if I am the only one that that has ever happened to. Alright guys, I think LinkedIn has fixed the error that they were giving me earlier. So let's get on with it. five reasons clients ignore auditors advice. So let me just start off by asking you guys a question. Everything should be peaceful in Paradise, right? If you lived in Paradise, the only reason you'd want to live in Paradise is because everything would be very peaceful. But apparently, there are some issues in the British British Virgin Islands. Let me explain what I mean by that. The head auditor for the British Virgin Islands says that? Well, her advice is oftentimes ignored. Doria Korea recently spent more than five hours listen to this guy's five hours before the commission of inquiry. Answering questions about her past audit reports in describing how her agency's work is often obstructed, and the findings are often ignored. Let me say that again. Her work is often obstructed, and the findings are oftentimes ignored. Again, I thought it would be peaceful in paradise. But before we go any further, let me explain what a commission of inquiry is. It's an independent investigation on matters of significant concern. It usually happens in an overseas territory and the commission is usually established by the governor. So it's typically led by an independent senior judge who considers the information submitted and draws an independent conclusion to help ensure the public welfare. It almost sounds like an audit, right? Yeah. This particular inquiry that's happening now was established in January of 2021. The governor of the British Virgin Islands will he called for the inquiry and the head of audit had to spend five hours before group explaining her organization's actions. And let me tell you guys what she said about the audit reports. One thing they said was typically those reports are not released to the public. Now that's very different from the way it happens here in the us because we know if you work for a governmental agencies, your audits are public record, but instead of being released to the public, these were kept quiet They only went to the governmental agency that was audited. So I know what you guys are thinking now, right? Surely, there was like an audit committee or a board that got these reports. According to the chief auditor for the British Virgin Virgin Islands, that Audit Committee was disbanded more than five years ago. But don't just take my word for it. Listen to what a local news agency there had to say about this particular situation.

Unknown: 00:05:37

Daria Correa is the director of the internal audit department in the British Virgin Islands. she testified earlier this week before the Commission of Inquiry ongoing in the territory, disclosing that the work of her department has often been hindered by obstruction, and that her department's lack of enforcement authority means that recommendations made in the department's reports often go ignored.

Rob Berry: 00:06:03

All right, let me know if you guys could hear that. But basically, she was just saying what the director of audit for the British Virgin Islands said that, oftentimes, their recommendations wit, ignored. Now, my good friend Trent is here and Trent says that his nuts will tread you and hurt the worst of it yet, my friend if you think that this is nuts, and we have gone Oh, here go nailgun Oh, you're from the Bahamas? I know that's a far cry from the British Virgin Islands. But have you guys experienced anything similar? And do you guys have a commission on inquiry over there? Let me know in the chat. Heather said yes, you could hear it. Thank you, Heather. I appreciate that. Again, you guys, we got knocked out of the stream earlier when I first tried to log on. So for some reason, LinkedIn doesn't like me today after about 40 shows you think that they would know and love me by now. And hell is here giving us the thumbs up. Alright, so what we're talking about is five reasons. audit clients ignore auditors advice. And what I've been telling you guys about is the director of audit for the British Virgin Islands spent five hours before Commission on inquiry because, well, they released some reports, and there was some significant issues. And for some reason, those issues were not resolved. I just let you hear one news clip about the issue. But now I'm going to let you hear another one. This one is well, kind of shocking. So pay attention to what they say here. Just listen to this is really, really interesting.

Unknown: 00:07:44

Korea told at the COI that the work of the internal audit department can be likened to two coats, or rabbits running around in a track. audit cycles are completed recommendations are given. And then follow up audits find that none of the recommendations have been implemented. We find ourselves at a roadblock, Correa said.

Rob Berry: 00:08:06

Now I think that's a pretty bad situation to be in when the auditor is saying they found themselves at a roadblock. And she likened the experience to running around on a track just running around with no goal in sight. And they've also come up with, like I said earlier, some fairly significant issues. So let's get to the reason why you guys are here. five reasons clients ignore orders. Why do they ignore you? Well, the first one we're going to talk about is the power of pride conundrum. So let me explain what that is. In his book, sidetracked why our decisions get derailed and how we can stick to the plan. Harvard social scientists, Francesco Gino detailed a few reasons why people don't listen to us. And the power pride conundrum was one of them. But he didn't just write about it, he actually did a study. So let's talk about this for a minute. In the study, he discovered that when people feel powerful, they are less likely to take advice. As a matter of fact, his research surmise that when we are trying to make a good impression on others and show them that we are knowledgeable and competent, we may not take their advice. And by taking that advice, we are somehow admitting that we are not deserving of our higher status. Now, you and I know that that doesn't make sense and that that's not true. But if that's the perception that our audit clients have, I think you might understand now, why when you go into an area, and you're talking to a senior vice president about some internal controls that have gone All right. They aren't listening to us. And I think that this is a good reason why the power pride conundrum. Now Joe says, the smartest guys in the room, yeah. Or no? Right. Trent says that it's tough to stay motivated to do the job if everything is ignored. I agree with that. And Joe says, sad state of affairs. Yeah, it's a sad state of affairs for the auditors, for the citizens, you know, that the auditors are trying to protect or, you know, do good audit work for? and Heather said, Why is she bothering to do any of the work if they are ignoring everything? You know, Heather, that is a really good question. I think she's just trying to do the job that they are paying her to do. And she's being obstructed from doing that job. But Reason number one of five is the power pride conundrum. And the power pot pride conundrum tells us that the higher the position that you're dealing with, you're not going to take advice from you, because it seems like to them in their mind. They're not deserving of their position, if they have to take advice and information from you. So you guys, we are on audit bites. And today we're talking about five reasons audit clients ignore you. The first reason is the power pride conundrum. So I'm not just pulling this stuff out of thin air. This is based on research by people who are a lot smarter than me. Okay, so the second reason that our clients will ignore you is what I like to call or what I'm referring to as the anger versus gratitude syndrome. So now let's explain what that is.

Rob Berry: 00:11:52

Whether or not we take counsel has a lot to do with the highs and lows of our individual moods. So when another experiment described in this book, one group of people were made to feel angry by watching a short film of a guy being bullied. A second group was persuaded to feel gratitude by watching a touching clip of a man who had received an unexpected gift from his work colleagues. Now, here's what happened. The Grateful group, they were three times more likely than the angry group to accept advice on a completely unrelated task, and they perform better on the job. So now understand what this truly means with the anger versus gratitude. If these people performed better on an unrelated task, what that means for us is, when we're interacting with our audit clients, that meeting that they were in before they came and talk to us, it's going to affect the way that they treat us. Whatever happened to them in the morning, when they got up, that's going to affect the way that they treat us when we scheduled an 8am meeting. And we didn't even bring doughnuts to the meeting for them. Now, I just think that that's very, very, very interesting. And concerning. And it's good to know because now you realize that people's attitudes and behaviors before they even encounter you will affect how they deal with you. Now, Mark is here. Hey, Mark, good to see you, man. He said it's kind of like how they have to go through the five stages of grief before they will accept the recommendations. Yes. And I actually have a separate presentation on that mark, because it is they actually do go through the exact five stages of grief. Now Joe? Joe is being funny Joe say bring them doughnuts to the next meeting. Absolutely. Joe. Wait a minute, Joe. Great minds. When did you take that while I was saying it? Joe? You probably did. There is a slight delay. That is kind of funny. Oh my goodness. Yeah, that's very funny. Thank you, Joe, for that comment. Now Cheryl, our travel girl. She says working in finance for years, she found that when audit suggestions are not implemented or ignored. It's always leadership problem at some level Absolutely. 100% of leadership problem. So yeah, you guys you're here with me, Robert Barry wound audit bites. The first live show where we're talking about audit and today's topic is five reasons clients ignore auditors recommendations or auditor's advice. The first reason was the power pride conundrum. The second reason was the anger granted anger versus gratitude. So let's talk about that. Third reason you guys. The third reason that they will ignore our advice is cognitive dissonance. Look, you hear that a lot. Psychologists use it a lot. Social Workers use it a lot, but let's talk about it. As humans, we all want the world to really just make sense. That's what we want to do. And when it doesn't go the way when it does when Doesn't we go through great lengths to feel like things are making sense? That's when you see people saying and doing things that really don't make sense. You see, there is a cognitive dissonance that occurs. But let's talk about what that is. So, a cognition, a cognition is, well, simply a piece of knowledge. It could be a thought and attitude, a personal value, or a behavior. The in compatibility, the dissonance could happen when you do something that goes against the value that's important to you. Or when you check this out, when you learn a piece of information that disagrees with the long standing belief or opinion that you have. Now, isn't that something that we do all the time? Think about it, we go in, and we audit areas, and we provide management with some sort of evidence, and it probably goes against what they already believe. I'll give you a really good example. I remember auditing something that turned into an investigation. And we found that this upstanding church member, a pillar of the community, she had done something wrong. I presented the evidence to the management team. And here's what they said to me. They said, How dare you accuse our church member of ABC? Apple lightly said, I didn't accuse her of anything. The evidence speaks for itself. But But again, you guys know how I feel about how dare you people, right? These are the people that will attack you, instead of the argument that you present? How dare you people with some of the world's people? Cheryl, you're still here with us. Glad to still have you here. Cheryl says that everything is better with donuts, right? I know. But here's the big question. Can you write those donuts off on your expense report? That's the

Rob Berry: 00:16:45

that's the big question. So, again, I'm Rob Berry, you are here with me on audit base, the first audit show live audit show where we talk about fraud. The five reasons your audit clients won't accept your advice. One, the power pride conundrum to anger versus gratitude, the things that happen to them before you encounter them will affect how they interact with you. The third reason, cognitive dissonance. So let's get to our fourth reason here, you guys, you didn't think that the job of an auditor was this hard? Hmm. These are things that you have to know because they affect your ability to get along well with your clients. Now, the third reason is the authority principle, the authority principle and I didn't make these things up, you guys, these are psychological and social work principles. So I didn't make this up, you can go look it up, if you think that I am just making it all up, but I'm not. So the authority principle states that people tend to comply with those in positions of power. So if your audit department has no perceived power, people probably aren't going to listen to you. If the C suite does not respect you, then no one else will. So let me tell you about a recent study that I found where it was surrounding response to the COVID-19 to the pandemic reactions it. They found that through their research, people were more compliant when they receive letters, quoting doctors, versus when they receive letters saying, do this and do that, but they didn't put a doctor's name behind it. So why do you think in the US we put Dr. Fauci on television a lot. People tend to believe those in positions of authority. How I haven't gotten there yet, but I'm going to

Rob Berry: 00:18:35

I am going to put your comment up after we hit the number five, because I think you have you have nailed reasons six through 10 on the head. So if I can get through number five without laughing we will put up Hell's comical comment. And for those of you listening on the podcast, you will definitely get a good laugh when you hear what my friend Hal Guerin has said in the comments here live on LinkedIn. Now, Joe is still with us. And I do thank you, Joe. Joe says they think says they need to read think again, it's time for people to unthink and re learn our beliefs. Absolutely. I mean, look, facts don't care about your feelings, and beliefs change, like the weather, but you know what doesn't change? What doesn't change is your moral foundation. If you believe in honesty and integrity, that should not change. But when I was a kid, I didn't like ketchup. No, I'm sorry, I didn't like tomatoes. But I love some ketchup. Now. I love ketchup and tomatoes now in that strange that they're both from the mayo. But your taste buds change what every seven years they say. So your beliefs will change, but your value should not change. Which is why sometimes I like to say when it comes to people, I don't value your views, what I value or your values. I don't value your views. I will say that until the cows come You can tell me what your view is, but show me what your value is. And that is when I can determine what your advice is truly worth. So, before I go down that rant, let's get to number five, you guys. The fifth reason audit clients will ignore your advice is will point blank, they could be just covering up corruption. Let's just be honest. Most people in the world are good people. But not everyone is a good person is a small percentage of people that are bad, and they will do everything that they can to cover up the corrupt deeds that they are doing. That includes belittling you stonewalling you not letting you do your job. And as the poor lady described from the British Virgin Islands, it's like going around a track in a circle. She's on a road to nowhere where she's trying to do the job that she's paid to do. And I see Cheryl has gotten a good laugh at herro at Hell's six through 10. So you guys, I am Robert Berry, you are here with me on audit bites. It is the first live show where we talk about internal auditing and today's topic, five reasons clients ignore auditors advice. Reason number one, the power pride conundrum. Look, people in positions of power, sometimes don't want to take advice from you, because they have some sort of pride surrounding taking advice from you because it makes them feel less than if they're taking advice from you. Reason number two, the anger versus gratitude. People who are in an angry mood, guess what, they're going to come to you in an angry mood. So sometimes they are going to act like buttholes not because of something you've done, but because of something they've experienced before they got to you. Reason number three cognitive dissonance, you are bringing people information that goes against their thought process, their patterns of behavior, their belief systems. So when they do when you do that, they may lash out at you. Reason number four, the authority principle, if you don't have any authority, sometimes people aren't going to listen to you. And Reason number five, they could be simply covering up corruption. Now, my friend how again, how has reasons six through 10? And how says Reason number six, you're incompetent? Reason number seven, they are incompetent. Reason number eight, you are not right, reason number nine, they are not right. And Reason number 10. Their job is at risk. All of these are very valid, because number six, you could not know what the heck you're doing in your job, and you could just be wrong, and you could be making everyone mad. Reason number seven, they could not know their job, and they could just be wrong and still, everybody's mad. Reason number eight, you could not be right. And you probably should go back and we'll make sure that you're right. Better yet. Not that you are right. Make sure that what you're saying and the data and evidence that you're presenting is right. Number nine, they are not right. And then number 10 their job is at risk and if their job is at risk, they will hit a fight or flight. Right. Alright, so look guys, again, Robert berry audit bites, five reasons, audit clients, ignore your advice. Let me know if there's anything you guys want to say. Got any questions? The chat has been open and Well, I mean, you guys aren't shy. You've been saying things all throughout. But I do agree with Joe they should read. Think again. excellent book. Excellent advice in that book. So where can you go if you want to find out more information about audit bites, you can go to audit bites.com. We are also now a podcast on your favorite podcasting platforms. Unless your favorite podcasting platform is Apple. Apple gives me headaches trying to set it up. I will have it set up on Apple at some point in time but for right now, no. You can get CPE for simply watching this podcast or podcast I hope co host with Joe Ervin and Kelly Paxson called the Friday froster you can go to Friday froster calm and if you really need that CPE go to $7 CPE. You heard me right $7 for our CPE E's $7 cpe.com look if you need a trainer for your audit staff call me up. You need a quality assurance review. Call me up. I am Robert berry again, audit bites your quick show where we give you information you can use to make you a better auditor. Thanks for your time and attention. We'll see you next time.