control, and governance
An audit director at a global manufacturing firm considers the impact of cultural differences on the success of an audit at one of the company's foreign affiliates.
Bob is an audit director for a global manufacturer of consumer products headquartered in the United States with worldwide operations in Europe, Asia, and Latin America. The company maintains 30 local affiliate offices in 18 countries, has four manufacturing facilities, and employs more 20,000 people. Its annual revenue in 2010 exceeded US $25 billion.
Bob reports to the chief audit executive, who is a strong proponent of cultural diversity. He believes that diversity presents a unique opportunity for the organization to mix staff and cross-pollinate cultures throughout the organization. The company’s senior managers are also strong supporters of this philosophy, believing that it is important to developing future leaders.
Bob has found that developing the cultural competency of his internal audit teams is one of the most challenging aspects of working globally. What seems effective in dealing with one culture is often ineffective, or even inappropriate, in others. Also, when conducting global affiliate site audits with such a diverse audit team, he has had to overcome some formidable challenges. These have included not only language differences, but cultural nuances and the attitudes affiliate management has exhibited toward being audited.
Bob’s latest assignment is overseeing an engagement at one of the company’s foreign affiliates. His audit team is culturally integrated and diverse, including men and women from the United States, Europe, and Asia. Most of the non-U.S. audit team members speak English as a second language; likewise in the affiliate, English while understood is rarely spoken. All of the audit evidence and documents to be reviewed including contracts, invoices, and other source documents are in the local office’s native language. Bob has hired a bilingual, local auditor from a global accounting firm to assist the visiting audit team with the engagement and the translation of documents being reviewed.
Bob has instructed his audit team to be sensitive to how the affiliate’s management and employees think and act. At the same time, he wants to ensure the success of the audit engagement, secure the commitment and cooperation from the affiliate, and head-off any potential cultural issues that might negatively impact the audit.
What are some of the issues and challenges Bob might be facing? What can he do to best handle them?
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