“They [the auditing industry] get all obsessed with their audit tools and their reports and they miss the goal which is to uncover the abuses.”
This quote is from an auditing industry expert in a new report by Human Rights Watch: Obsessed with audit tools, missing the goal. In summary, the main findings are:
– Auditors are pressured to drive down costs by limiting the time available for audits, which undercuts the quality of audits significantly.
– Conflicts of interest between the auditing firm and their
paying client can cloud the social auditing process. For example, third-party monitors tend to be more lenient when monitored firms pay them directly.
– Many suppliers, eager to get good social audit reports
or be certified, attempt to hide abuses or other adverse impacts during audits.
– Social audits and certifications do not detect structural root causes of adverse impacts.
– The lack of transparency allows poor-quality audits to thrive unchecked, under the radar.
With the CSRD on the horizon, I’m wondering whether we’ll see a decreasing or increasing gap between what’s written on paper and what’s actually happening on the ground.
And how will the assurance industry, incl accountants, assess the quality of company reports that rely heavily on auditing? Don’t they suffer from some of the same business pressures as the auditing industry?
Solutions? Next to the recommendations made by HRW, I think a rigorous inclusion of the voice of adversely impacted rightsholders in due diligence and reporting would be a good start. This is in line with the UNGPs and gives clear information on the status of the adverse impact and how it could be solved. The Local Impact Hub can support stakeholder engagement and connect companies with relevant stakeholders and affected rightsholders.