Reputational scandals in the audit services market are widespread. The companies of both the "Big Four" and the smaller ones are regularly in the epicenter. How well they hold the punch - show independent ratings and the overall success of the company in the market. Why is reputation so important in auditing? Because trust is at the heart of it. The higher the level of trust in a business, the better its reputation.
Building reputation capital
Audit is a business. Business cannot grow without capital. Recognizing the multifaceted nature of such a phenomenon as reputation, and focusing on audit as a business activity, we will introduce the concept of “reputation capital”.
Although such capital is intangible, it is the basis for prosperity and business development, expansion of clients and increase in profits. Such capital may not appear immediately, it is difficult to buy for big money, but it is easy to destroy in one second.
Therefore, reputation capital, like any other, must be managed by an audit firm. Today, such management is carried out in two main areas – to convince the target audience that the audit firm can be trusted and that it is the best among the others.
Why can we be trusted?
Prior to the occurrence of reputational assets, each audit firm has a reputational potential. It can be low or high. A professional team, a charismatic leader, a sufficient list of services, membership in international professional networks or associations, logical business processes are a good base for reputation. At the same time, saving on professionals, too many projects that affect the quality of services, difficult communication with key stakeholders diminish reputational potential and give it no chance to grow.
Trust in an audit firm is being built for quite some time. A known name can accelerate this process. The Big Four are a priori trusted, as they have been working with their reputation for over a hundred years, and this process does not stop today. Entire PR departments, communications and anti-crisis communications departments regularly “whiten” the reputation of the Big Four companies if they are caught in a particular scandal. Other audit firms do the same thing, knowing that a good name is the foundation of their business.
Ukrainian audit firms that have not yet joined the professional international networks, associations and alliances should carefully analyze their activities before making such a decision so as not to damage their own reputation. The decision to remain under one's own brand also has the right to exist. In this case, more effort will be needed to win the trust, but there will be no responsibility for other reputational errors.
Presence in the market
It is known, the Big Four companies were established as a result of a series of mergers and acquisitions that had been taking place over a hundred years. Long time working in the market is a good contribution to the reputation of an audit firm. Market veterans who survived a bunch of events and kept their businesses are trusted. Therefore, if the audit firm has been working for a long time, it should be emphasized in communications with the target audience.
At the same time, this does not mean that there is no place for newcomers to the audit. In our country, where everything new is appreciated, you can just play the card of youth, novelty, freshness. Proper positioning and messaging will add weight to the reputation of a newly formed audit firm.
Clients and successful projects
While auditors should be sensitive to the privacy of their clients, their websites, presentations, and offers have this kind of information. Well-known clients are important, of course, but it is much better to provide them with professional services.
Throughout the world, audit is a regulated type of professional activity. Ukraine is no exception. It should be recalled that, in accordance with the Law of Ukraine “On Audit of Financial Statements and Auditing”, audit entities may provide audit services only after they have been included in the Register of Auditors and Audit Entities.
The audit firm must also undergo a quality control performed by the Quality Assurance Inspection of the Audit Authority and the Audit Chamber of Ukraine (depending on the category of the audit firm). Successful completion of such an audit is also a significant contribution to the reputation capital and the building of trust to the audit firm.
The European institutions represented in Ukraine, in particular the European Bank for Reconstruction and Development, only allow audits of their projects, which are among the top thirty in terms of income of professional networks and associations according to Accountancy Age and are members of the IFAC Forum of Firms, which is the international networks of audit firms performing cross-national audits. It is not easy to achieve such gains, so the firms that managed to do so are trusted by default because their reputational capital is quite convincing.
We are the best choice
Having proved in a well-argued manner, paying attention to the fairly formal but important components of reputation capital that an audit firm can be trusted, one must proceed to persuade the client to choose it. And here it is already necessary to appeal to not always formal things.
Audit is an intellectual service. It is difficult to imagine. That is why it is necessary to visualize such services, humanizing business. Each line of services provided by an audit firm must be associated with the person who provides or directs them.
Communication is an important component of a successful business. The audit firm should build and maintain communications with all stakeholders – clients, staff, partners, regulators, society, government, etc. Today it is possible to involve all channels for this purpose – corporate site, pages on social networks, telegram-channel, various types of media and participation in events.
The winners are those businesses that do not forget about their own social responsibility. Social responsibility is an ace in the competition of reputational capital. Fair work remuneration, good social layouts, charity and sponsorship activities take the audit firm to another level of business. There can be many ideas for social projects. The main thing is to work in this direction, adding bonuses to your own business and expanding the professional horizons.