Professional Non-Financial Audits and Reports Can Prevent Colossal Losses

 As comments on our blog posts have been far and few so far, we interact informally with groups of executives to get valuable feedback to ensure our efforts bring benefits to readers. 

This week's topic is the result of the following discussion with one such group and it was a revelation to us.      

"You just touch upon vital topics and leave them,

saying that the rest of the issues are obvious."

"Can you be more specific?"

" Yes, the blog on various quotients was

really new and insightful and beneficial.

But, you only explained two and moved

on to the next topic."

" Let's make amends right away. Which

specific quotient is a priority to you?"

" Integrity Quotient. "

"Ok, we will go back to that one in next week’s post.

And please tell us about

More such gaps and recommend new topics."

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The word Integrity is heard often and is considered highly important for individuals and society at large. But what exactly is integrity? Like the group pointed out, few can answer clearly.

Let us start with the definition. According to 'yourdictionary.com', integrity means "following your moral or ethical convictions and doing the right thing in all circumstances, even if no one is watching. Having integrity means you are true to yourself and would do nothing that demeans or dishonours you."

If everyone has high integrity, there will be little need for the prolific supervisory and regulatory machinery all around. There is a concept of group integrity where some firms follow "self-managing" teams.

 While our discussion with the group of executives was in progress, someone produced a Business Week report citing a summary of a government report titled, "401 infra-projects show cost-overruns of Rs 4.02 trillion". It also mentioned that the time overruns were from 12 months to 61 months! All these colossal losses would have been saved if the groups of workers and managers had done "the right things for the prestige, pleasure and pride for their groups”.

There are obstacles, but the skill lies in overcoming them. As mentioned in an earlier blog, during the negotiations for the construction of Rourkela Steel Plant in 1955, Prime Minister Nehru told Alfried Krupp (the German contractor) that the cost of their advice (consultation fees) was very high. Krupp instantly responded that India needed the advice, but, if the project was not completed within the agreed time limit, the fees could be forfeited. Krupp's team with Indian workers did complete the project before the target date in Orissa of the 50s! That's a wizardous spirit! 

Till we turn our managers into such wizards, there is an immediate need to make Non-financial Audits compulsory. They can point out the delays and overruns in time for corrective actions. The  Financial Auditors are statutory and mainly attend to compliance with rules. Donald A Curtis, a USA Financial Auditor, admitted that it would be "WRONG "to think that, "Everything important can be translated into this quarter's or this year's dollars and (that)……….YOU CAN MANAGE BUSINESS BY MANAGING MONEY." Let us change our mindset.

There is a worldwide drive for compulsory Non-financial Audits for social, environmental and sustainability aspects. Let's have an intense drive for "On Time, Every Time".