Ainsley Deer, Contributor
DEER
WHILE IT is true that we are individually different, when it comes to how we see the world we do share some similarity in the way we think. People tend to harbour certain cognitive weaknesses and biases when it comes to their thinking.
The common belief in more enlightened circles is that this is to reduce uncertainty and simplify their world. While uncertainty is indeed a fact of life, our behaviour in Jamaica suggests that we want more than anything else to deny the uncertainty we face.
Observe the behaviour of those who lead us and you'll soon encounter an attitude that suggests that they are in control of the most rational country on the planet.
This, in my view, is an act of blatant denial and self-deception. This perception of being 'in charge' by our leaders in business and politics is often an illusion which has got us into deep trouble because we are so pretentious.
We behave like we know all the facts and what the risks are; who the potential affected parties are and the consequences of our decisions.
When things go wrong, we find it hard to apologise because we don't make bad decisions. We are men of impeccable integrity the perfect ethical role models.
But, if our thoughts about ourselves are controlled by illusion rather than reality
somewhat like 'The King's New Clothes' how can we make a good decision about our integrity?
We have evolved into a state that cannot differentiate between what is right and what is wrong and this accounts in large part for the high level of corruption in Jamaica.
Our leaders behave like our people and the rest of the world are fast asleep while they are wide awake.
DISTORT INFORMATION
In our self-righteous intoxication, we consciously and unconsciously filter and distort information in order to maintain our positive self-image Jamaica no problem. In a situation like this, the only thing our people can do is to be honest with themselves.
And what of the ethics in our respective professions that should guide us as politicians, doctors, lawyers, religious leaders, contractors, etc.? We have not been very successful, have we? The National Solid Waste scandal is no less shameful than waste management and Enron for whom Arthur Andersen signed off on audits that misrepresented their finances.
In the latter cases, the certified public accountants are supposed to have been guided by the ALCPA code of professional conduct, according to which, "As professionals, auditors have a responsibility to act in the public interest - be free of conflicts of interest, not misrepresent facts, or subordinate
professional judgement to others."
UNREALISTIC
In all fairness, however, given human cognitive limitations, this expectation is probably unrealistic. Given the closeness between an auditor and a client especially a big client when the auditor has to decide whether to provide a negative audit opinion on their financial statement, a biased information processing can easily sway the decision to be taken in favour of the auditor and his/her client and not the public.
It is not unreasonable to assume that the auditor may factor in the negative financial consequences to his company if they were to lose that block of business. They are no
different to those who are 'genetically linked" to a particular political
ideology or party. Auditors, like party faithful, like religious fanatics, can easily rationalise a decision that is consistent with their own and their company's/party's/church's self-interest and down play the potential consequences to an often ambiguous, ill-informed and unknown public.
Auditors, like other professionals are human beings who are affected by cognitive limitations and biases. Given what we know about these biases, there are some potential solutions for companies:
1. Auditors should be discouraged from developing personal relationships, receiving gifts or socialising with clients.
2. Companies should probably change auditors every four years to avoid forging personal ties.
3. Auditors should be sensitised about the likely negative consequences of financial misrepresentation to themselves, their firms and the public.
4. Harsh penalties should be imposed on auditors who are found guilty of financial misrepresentation and generous rewards given to those who behave ethically.
Ainsley Deer, MSc, MJIM is a management consultant with Training Dynamics & Consultants Ltd.
Email: ardeer@anbell.net
Taken from the Financial Gleaner, Friday, October 21, 2005
