The Problem With Value: Professor Bob Graff

這篇文章很早已前就想要轉過來，但是一時想不到要下什麼 comment：該講的都被作者講完了。

台灣的上市櫃公司的董監事和管理階層，絕大多數都還是用創業者或大股東的心態來經營公司(當然不能說他們不對，因為他們還真的是大股東或創業者)；對他們來說，audit 是股票公開發行籌資的必要之惡：「我花了錢，會計師就應該幫我搞定！」、「不要再告訴我你還要我作什麼！」。相較於國外成熟的大企業，是把會計師查核當作廣義的股東關係和公共關係的一部份，因此，對於審計品質的要求要高了一個層級。

value 的問題在台灣還有另外一個 issue：在台灣的商業環境和文化下，簽訂合約，只代表雙
方「開始」溝通合約條件而已，簽約雙方都不真的把合約內容當一回事；往往在簽約後，客戶發現合約內容有什麼不利之處，還可以要求事務所額外提供不在合約內容內的服務，而不另外簽訂合約或付款；更有趣的是，事務所也把這種事情當作理所當然的「客戶服務」！

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The Problem With Value: Professor Bob Graff

By Francine • Dec 24th, 2009 • Category: Audit Firm Management, Pure Content


Bob Graff is a retired PricewaterhouseCoopers partner living in South Korea. He worked in the Systems and Process Assurance practice (SPA). It was called CAAG in 1986 when he first started doing technology consulting for clients. He has been associated with the Korean practice since 1995 until his retirement last year. He is currently lecturing to the next generation of Asian business leaders at Solbridge Intl School of Business, Daejeon, Korea. This guest post was written exclusively for re: The Auditors.


The Problem with Value


One of the factors which lead economies to repeated brinks of disaster is the pursuit of value. Not that the pursuit of value is wrong, but rather when the definition of value is not shared by the concerned parties inappropriate professional behavior results.


Much has been written and fingers pointed at examples such as banker’s bonuses, underwriter’s creation of dubious investment instruments, auditor’s failure to fulfill their responsibilities and, outright fraud. Generally, one is lead to believe individual self interest motivated the actions, or lack of, of those individuals involved.


While it is understandable we view such actions in terms of greed, this reasoning leaves us with only regulatory and punitive actions by which, through fear of detection and punishment, we attempt to ensure an environment where we can trust the actions of others. Quite frankly, regulation and penalties have proven to be ineffective (or we would have solved this by now).



What is needed is a new approach. Not to replace post-event regulation and punishment but to augment them with inducements to encourage the behavior we desire.


As human beings we look for single solutions to complex issues. I do not believe there is a single solution but, there may be a common issue.


I believe the root of the problem lies in our unquestioning acceptance of the term “value”. A quick internet search on the term value will lead to at least a dozen different branches where value is defined and yet we use the term as if it were mutually and universally understood. I believe this common acceptance is unwarranted and in fact creates the undesirable situations mentioned above. Let me propose a definition of value. “That which moves us toward our goal(s) has value. The degree of value is determined by the priority of the goal and the extent to which we move toward it.”


Let me use the auditor /client relationship as an example of how the lack of a shared understanding of value can lead to inappropriate behavior.


The auditor/client relationship is initiated through the RFP – proposal process. In this process the client states requirements and the auditor responds with an understanding, solution, and pricing offer. From this point forward the relationship is tainted and the seeds for inappropriate behavior are sown. Why, because in almost all cases the framework of the relationship is now based on the stated requirements and price – not the desired goals and anticipated value of the service.


This is inadequate because the client has defined the requirements in terms of what they see to be the solution to a problem not in terms of what their goal(s) are. The auditor further compounds this by replying in terms of solution (not outcome) and attaches their goal in terms of price.


A number of issues follow.


Changes in the client’s goals change the adequacy of the stated solution (or realization the initial solution was inadequate) and the auditor is forced to expend additional resources to achieve a changed solution. (They may choose to accept this increase or add additional charges to compensate.) In this case, the client does not really understand the auditor’s position as they believe they contracted for a goal achievement (value) which has yet to be delivered.


In another case, clients fail to see the value in the delivered service and look to maximize their investment in the relationship by asking for “value-added” service. The auditor responds by delivering beyond what was stated in the contract, typically by performing services which they believe the client will value. But again, without a clear understanding of what the client values this effort will be haphazard at best.


At the end of the day both parties feel unsatisfied. For the client (the more basic the service, such as audit) the lower the switching cost and higher benefit from cost shopping other firms. However, the auditor has now made an investment in the client and will take steps to retain the relationship and money stream. From this point forward the risk of a downward behavior spiral expands. As once the auditor demonstrates flexibility in service or cost the client will push to find the limits.


Most of us in the profession have witnessed this dynamic with frustration. I have heard many professionals question the value of their service, driving them to cling to regulation, methodology and, technique rather than search for the value they deliver.


What can be done?


If misunderstanding value is contributing to the problem, an improved understand of goals should lead to improvement. But how to achieve this improved understanding?
The client is not likely to initiate additional effort without demonstrated benefit. But the auditor does stand to gain from an improved understanding of goals and so, it will be the auditor who must make initiate this process.


Here are some common sense steps auditors can take:


Enter a dialog with the client prior to responding to the RFP. Go beyond understanding the stated solution to seek out their goal(s). What is the outcome they want? Few, if any, clients want a new system, audit, or survey just to have it done.


Align your proposal to the client’s priorities and goals and find where you have common goals (yes, your goals are important too.). Some of the most enjoyable and successful engagements I have participated on were those where we had common shared goals (i.e. SOX implementation or SAS 70 attestations).


Start proposals with a clear value statement. What goal will the client be closer to at the end of the engagement. This will lead to better scope creep control, expectation management and project success. As a test, take a current proposal and count how many pages are devoted to the project value and how many are spent describing technique and methodology. (What priority does the client place on your process vs. his goal achievement?)


Have periodic status update meetings, not focused on % solution complete or solution problems, but rather on goal achievement.


With a clear common understanding and communication of the goals and values desired a significant step would be taken to ensuring the mutual behavior desired by all shareholders.

How warm is your home?

Now I know that average the room temperature of a British home is at 17.5C. This reminds me two things: the first is that I had to sleep with my sweater and jacket on when I was in a home stay in London because it was so cold. The room temperature was at about 12C. That really surprised me, and froze me as well; the second is when health visitors came to my flat to see how my son is taken care of soon after he was born, they were surprised that we kept the room temperature at above 20C. Their official suggestion is to keep room temperature at 17-18C to prevent SIDS (Sudden Infant Death Syndrom). Well, I don't think any family in Taiwan is able to keep room temperature well below 20C and SIDS is not that common in Taiwan. Maybe that's just another myth.

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3 March 2011 Last updated at 02:34 GMT

How warm is your home?
By Megan Lane

Our homes are getting warmer just as the powers-that-be are asking us to turn our thermostats down. How cool is too cool for a house?
Spring is in the air in the UK, but it will be weeks - if not months - before the nation's radiators switch off.

The average indoor temperatures of British houses are creeping up now central heating is the norm, and double glazing and insulation are added to older, draughtier homes.

In the UK Department of Energy and Climate Change's new online modelling tool My 2050, users can decide what they want the UK to be like in 39 years' time. The only caveat? Carbon emissions must drop 80% while keeping the lights on.

It shows that hitting this target requires more than extra wind turbines or nuclear power stations. How many cars should be electric? Should international shipping grow or shrink?

Continue reading the main story Government drive My 2050 is web application for Department of Energy and Climate ChangeThey want to cut emissions by 80%Design your own virual future with My 2050
And, most immediate to personal comfort, should the average indoor temperature of British houses continue to rise, stay roughly the same at 17.5C (63.5F), or fall?

Dropping it to 16C - the lowest setting in this virtual world - only shaves 7% off carbon emissions. Even if we all get in the habit of wearing woollies inside, this will still feel chillier than usual to most people.

David MacKay, the DECC's chief scientific adviser, practises what he preaches in his once draughty semi-detached 1940s house. As well as double glazing and insulation, he has turned the heating right down.

"When I'm at home, my normal thermostat settings are roughly 13C, but lower when I am out, and 15C, briefly, at getting-up time in the morning. One important additional rule is that whenever I feel cold, I turn the thermostat up as high as I like. The automatic thermostat control then turns it back to the normal settings a few hours later."

He hopes that insulating more homes, smarter thermostats and "the promotion of sweater-wearing by sexy personalities" will encourage more people to follow suit.

Wrap up warm to get cosy
But to many, a thermostat set in the low teens may sound unconscionably frugal - especially when the range of numbers commonly goes from 10 to 30C.

Comfort cannot be defined absolutely, but the World Health Organization's standard for warmth is 21C (70F) in a living room and 18C (64F) elsewhere.

Our expectations of thermal comfort have been raised by central heating at home and at work, and because we are more sedentary at home and at work. Those sitting still - in front of the TV or at a computer - feel the cold quicker than someone moving about.

"A human's perception of whether they feel warm depends on what they are doing, and what they've been doing for the past hour or so," says Dr MacKay in his book Sustainable Energy - Without The Hot Air.

According to one widely quoted model, devised in 2008 by the Building Research Establishment and used in My 2050, average indoor temperatures have risen from 12C in 1970 to about 17.5C (63.5F) today.

But, says Michelle Shipworth of the UCL Energy Institute, this model assumes we are turning our thermostats up, to explain why energy use hasn't gone down as homes have become more energy efficient.

What has happened, she says, is that we now heat more rooms, and for longer.

Continue reading the main story Living room temperatures18-21C - comfortable temperature9-12 or 24+C: Risk of stroke and heart attack21-24C or 16-18C - some discomfort12-16C - risk of respiratory diseaseLess than 9C - risk of hypothermiaSource: Study by housing expert Richard Moore
Forty years ago, few houses had central heating, and chilly hallways and spare rooms dragged the average temperature down. Radiators now warm rooms that previous generations wouldn't have heated - corridors, bedrooms, and bathrooms.

The last comprehensive set of measured home indoor temperatures is from 1996, when the English House Condition Survey found that although living room temperatures in winter remained relatively stable, the nation's hallways were getting warmer - up from 16.3C in 1986 to 17.9C.

"And for bedrooms, you'll be far more comfortable while you're asleep if it is about 14 or 15C," says Shipworth.

Dr Lucy Worsley, chief curator of the Royal Historic Palaces, agrees. "My grandmother wouldn't sleep in a heated bedroom, and would always have a window open. You can't imagine many people today feel the same."

In our enthusiasm for cosy homes, she says many of us are like the profligate Georgians.

Continue reading the main story “Start QuoteFair houses so full of glass that one cannot tell where to become to be out of the sun or cold”
End Quote Sir Francis Bacon on 16th Century fashion for huge windows
"A warm living room showed you were a good host and a generous person. They thought an element of wastefulness showed you had enough cash to be generous," says Worsley, presenter of BBC Four's If Only Walls Could Talk, a history of our homes to be broadcast in April.

"In medieval times, heating your home was akin to burning money. There was a 16th Century saying, 'the game's not worth the candle' - a task was only worth doing if it justified the expense of illumination.

"But when people began to have more spare time and spare money, considerations of waste became less important."

With energy bills soaring in recent years, and more people aware of energy consumption, she expects frugality to be thrust upon us once more.

"I do think the future will be medieval, when the big bang comes and we run out of oil. Small windows, shutters on the outside, a chimney for natural ventilation."

Learning to operate a smart thermostat takes time
And expectations can be adjusted down as well as up. In Japan, there is a move away from super-cooling and over-heating office buildings. Government officials are encouraged to abandon jackets and ties in summer, and some local authorities have workers wrapped in blankets at their desks in winter.

"In 2005, Prime Minister Koizumi decreed that no government building should be heated above 20C or cooled below 28C," says Professor Michael Kelly of Cambridge University.

"That had quite an energy saving, but no drop-off in worker productivity. Compare that to London, where the expectation is that buildings will be within a few degrees of 22C year-round."

So will smart thermostats and radiator valves help, allowing homeowners to target heat where it's needed at different times in the day?

Experts say technology can do only half the job. A smart thermostat is only as smart as the person operating it.