Culture, Language Challenge Multinational Audits: Auditors

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By Denise Lugo

Aug. 8 — Some of the challenges U.S. audit firms face when conducting multinational audits stem from culture and language differences of a foreign jurisdiction, according to an American Accounting Association panel discussion in New York.

Challenging or questioning a superior isn't part of normal practices in some foreign restrictions, panel discussions Aug. 8 indicated. In an auditing environment where skepticism is important, this adds complexities and would likely have an impact on audit quality, panelists from EY, Grant Thornton and Brigham Young University said about challenges of auditing in a global environment.

“For firms it goes to education and oversight” on both ends, said Jeffrey Burgess, Grant Thornton's national managing partner, audit services. “On the U.S. end, it's educating our partners and our people with respect to cultural differences in some of the countries where our clients operate and to make sure that our people understand those cultural differences—where culturally things might be acceptable in those countries that wouldn't be acceptable in the U.S.—so that's a big issue,” he said

Communicate

Burgess also pointed the importance of better up-front communication with both U.S. and foreign teams about issues that auditors see.

Among suggestions other panelists highlighted include the importance of auditing firms conditioning their primary teams about some of those cultural differences to sensitize primary team. They also suggested sending their teams to foreign jurisdiction— and vice versa—so that they can glean a better understanding of the local issues.

Competencies and Documentation

Other global auditing challenges that panelists raised include competencies—for example, who is part of the audit—and documentation issues, such as identifying work papers and making sure they are translated.

Overall, panelists pointed to the multifaceted nature of the issue, which involves knowledge of different auditing and accounting standards around the world. They also cited the need for understanding local regulatory and statutory reporting and being able to align all of those pieces.

To contact the reporter on this story: Denise Lugo in New York, dlugo@bna.com

To contact the editor responsible for this story: Steven Marcy at smarcy@bna.com

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