While society expects professional accountants and auditors to protect consumer rights, they remain oblivious of this responsibility.

Auditors need to take the initiative to develop a ‘sustainable model’ for businesses which focuses on building a robust society and preserving natural resources.

Confidence in financial data produced and verified by auditors forms the core of public trust and public value.

Consumer interest watchdogs, including the regulators, government agencies, consumer associations, trade associations, media and courts depend upon the information prepared and audited by accountants.

And emerging market realities demand that accountants and auditors broaden their horizons and guide businesses in adopting international best practices. Their changing role demands more than just verification of companies’ financial statements.

Auditors owe the people to encourage businesses to make every possible effort to adopt all modern cost accounting tools and techniques to produce goods at competitive prices.

Consumers expect businesses to offer them goods and services at affordable prices.

It may be recalled that the ‘Consumer Protection Guidelines’ adopted by the United Nations in 1985, emphasised upon governments to encourage fair and effective competition in order to provide consumers with the greatest range of choices among products and services ‘at the lowest cost’.

Only a few big businesses are involved in corporate social responsibility (CSR) activities and issuing ‘sustainability reports’. This indicates larger scope for auditors to promote CSR in the country.

The International Federation of Accountants (IFAC) also stresses the significant role of professional accountants in promoting CSR practices and supporting sustainability efforts in business organisations.

It expects accountants to oversee, measure, control and communicate long-term sustainable value creation for organisations. In this perspective, professional accounting bodies also need to re-align their curriculum and CPD activities to keep accountants and auditors updated.

Auditors need to familiarise themselves with local consumer protection laws so that in addition to their traditional role, they can also ensure compliance with consumer protection laws.

The ‘demand and supply theory’ and production and distribution of goods, depends solely on consumer well-being. Consumers keep the wheels of the economy going by generating demand for goods and services.

The entire supply chain relies on consumer demand and preferences. Over the last two decades, ‘consumerism’ has spurred industrialisation, creation of mass markets and phenomenal growth in global trade.

It is time for auditors in Pakistan to persuade businesses to adopt more environment-friendly industrial processes and invest in green innovations and technologies.

The entire cycle of raw material exploration and extraction, product transformation, energy consumption, waste generation and use and disposal of products have to be made more sustainable.

Auditors also need to acquire knowledge on how to carry out ‘social accounting and auditing’. This covers ‘environmental accounting’ which focuses on cost structure and environmental performance of a company.

In Pakistan, internal quality auditors in the sports good industry have set a good example. They have moved from financial auditing and internal control compliance to a new ‘role of overseer’ with primary focus on quality system reviews.

They have also helped the sector achieve considerable reduction in costs, rejection rates, defects and innovations in production process. Pakistan’s sports goods are popular globally owing to their standard and quality.

Reshaping the internal auditor’s role

Among the auditor’s many roles, one is to help businesses act ethically in order to protect the interests of the public. They can do this by conducting social audits and certifying supply chain behaviour.

Internal auditors can conduct ‘supply chain audits’ — to promote a ‘sustainable supply chain’. These are perceived to be critical to the survival, and ability to gain or maintain a competitive advantage, in organisations.

For this purpose, the key objectives and potential outcomes of a supply chain audit from a strategic and operational perspective first needs to be defined.

Thereafter, a criteria to evaluate the effectiveness of the organisation’s supply chain strategy and finally develop a fresh benchmark to measure and evaluate the efficiency, responsiveness, and flexibility of the organisation’s supply chain operations.

Another role of the auditor is to assist public sector organisations, such as aiding the government to bring transparency and accountability in students’ fee charged by private schools.

It should be made mandatory upon private schools, colleges and universities to carry out ‘performance audits’ through cost and management accountants to evaluate the structured process and polices for collecting and managing student fee.

This includes justifying fee increase and the identifying specific areas where the collected fee is being utilised by the institutions. It is also important for auditors to conduct periodic reviews to ensure that the school revenues are being used for their intended purposes.

The KP Higher Education Department has recently decided to go for ‘performance audits’ of eight newly established public sector universities in the province through an international audit firm.

The purpose of this audit is to verify whether the Rs10bn grants to these universities, provided by the provincial government, have been appropriately utilised and if the amount has been used to improve academic performance.

Similarly, auditors can also be associated by the government in the performance audits of hospitals and medial teaching institutions. The Punjab and KP governments have already taken some initiatives in this regard.

However, there is a need to devise a structured mechanism for mandatory performance audits by auditors to expand its scope to other parts of the country.

Another avenue that can be explored by auditors is ‘Retail Audit’ which is the measurement of consumer products, markets and market trends.

A Retail Audit can help companies develop competitive strategies and discover preferences among consumers. This covers assessing the efforts made by manufacturers, support extended by retailers and the response of the ultimate consumers.

The writer is President, ICMA Pakistan

Published in Dawn, The Business and Finance Weekly, June 26th, 2017