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Causal Capital ~ The Knowledge Capital Specialists

Auditing Culture

Sunday, April 8, 2018

It’s been a huge week in Dubai working with some incredible auditors to develop techniques for auditing organisational culture, a project we have labeled as ARC.

 

During the Global Financial Crisis, it become apparent that the entire banking community had pandemic wide mis-alignment of ethical fundamentals that became the backdrop for poor cultural outcomes. Even so and more recently, we are reminded that organisational culture has a tendency to positively or negatively influence business line behaviour that can feed terrible situations not unlike the Wells Fargo mis-selling disaster or the Volkswagen omission scandal.

 

All of this and recent language in various regulatory publications across planet including but not limited to The Financial Stability Board, The Australian Prudential Regulatory Authority or The Monetary Authority of Singapore are driving some stakeholders and audit committees to put the assessment of organisational culture squarely on the auditor’s radar.

 

The problem with assessing organisational culture is that aside from ensuring and testing specific infrastructure is in place such as a Whistleblower Mechanism or Tone at the Top Communications, the contextual layer of motive and behavioural feedback is more often than not highly intangible. Valuing or assessing anything that is intangible doesn’t come without its difficulties.

 

Auditing Culture | Dubai April 2018

 

All this aside, our ARC masterclass developed a framework that assists auditors assess the functional layer of culture in their organisations. We also demonstrated how to adapt or enhance a Risk Based Audit to be inclusive of a Cultural Assessment. It's a [ Risk Based Audit ] PLUS [ Cultural Audit ] audit approach.

 

One of the highlights for me during the program was that we were able to develop a working Risk Sensitive Cultural Audit Scoring System (RSCAS) that auditors could use to score any business unit they are auditing from and in a cultural perspective uniquely. In the coming months ahead we intend to enhance RSCAS and publish a working paper on the technique in more detail, and in the hope that all auditors can benefit from the method.

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