A few months ago, the Finance Innovation Lab launched AuditFutures – a new systemic work around rebuilding trust in business. The first innovation workshop on 4 July was a tremendous success and we have developed a strategy to move the work forward. Not surprisingly, open data came up in the discussions in two of the eight innovation domains. We feel that the knowledge and perspectives of the OKFN will bring value to the discussion.

 

Where are we?

The Finance Innovation Lab was established about four years ago by ICAEW and WWF-UK to inspire a financial system that sustains people and planet. This year, the Lab has been selected by NESTA and the Guardian as one of the top radicals who have transformed society. Building on the established success and momentum of the Lab, the Audit and Assurance Faculty of ICAEW has taken a bold initiative to innovate audit and reconnect the profession with the public interest.

The audit and accounting profession is at crossroads and we believe this is an opportunity to host a positive and proactive process about the future of the profession. Using our open and participatory approach, we organised an innovation workshop to crowdsource ideas for audit so that it can best serve society. On 4 July we convened over 120 participants from more than 75 firms and organisations.

 

What is our approach?

We designed a process to identify the emerging themes that helped form the agenda for the day. We had over hundred perspectives in the room, emerging from over twenty discussion tables. The goal of this process was to collect ideas in a transparent and democratic way, and to visually identify common patterns.

Some of the emerging themes are: the need for more flexibility in audits, standards and regulation;  integration of a broader stakeholder community;  better communication of the value of audit;  engaged dialogue with investors;  developing a new culture of challenge and critical thinking.

We clustered almost fifty themes into eight innovation domains: New Audit Methods, Changing the Culture of Audit, Serving a Wider Stakeholder Base, Rebuilding Trust, A New Reporting Model, IT Innovation, Auditor Reporting, and Recruitment and Training. We hosted in-depth working group discussions around these areas and collected further insights into what would move the ideas forward. Most participants signed up to continue working on some specific areas and we are working with them now.

You can watch a short video from the first assembly here.

 

“Open data is trending – get on board”

This was the summary tweet for one of the working groups. As part of the process of distilling insights and intelligence, we had asked each of the 16 working groups to come up with a tweet that summarises their work.

In two of our innovation domains – ‘Rebuilding Trust’ and ‘IT Innovation’ – open data came up among the discussed themes. The groups looked into what would make most difference to their chosen areas. More open data and transparent information in the audit process have the potential to directly engage wider stakeholder groups. For example, audit files and data could be made publicly open in a machine-readable format.

There is an interesting dynamic in thinking about what open business data could mean. One set of questions would focus around the range of information companies disclose to investors and public scrutiny. In the current climate of tough competition and patent wars, open data might not be regarded favourably.  Another question would be the role of auditor – what specialist skills would be the needed to analyse and visualise the data? Could Google be the next big audit firm?

 

Can OpenAudit be one of the next steps?

The Open Knowledge Foundation has made a significant push towards the transparency and accountability of published financial statements in the public and government sectors. Earlier this year OKFN published a comprehensive report on transparency and accountability in public finance. The report demonstrates the ways technology can contribute to fiscal transparency and offers perspectives and recommendations in several areas like data availability and standards for fiscal data.

In the same time, the OpenCorporates project
has made significant progress in creating the open database of the corporate world. Currently, more than 46 million companies from over 60 jurisdictions are listed (including almost 8 million from  the UK). The project was an award winner in the OpenDataChallenge and in early 2012 was appointed to the Financial Stability Board’s advisory panel on a legal entities identification for finan.

What should be the next step in rebuilding trust in business information? We would like to discuss how open data can help the audit profession and what role auditors can play in the global trend of disclosing more information to the public. It is important to view open data solutions from the perspective of the public interest. Do we have a good understanding of what is relevant and important to the sectors of society that audit serves? It is important to consider whether the users of audit would value it more if it were an insightful dynamic infographic based on open data.

The two starting points for our discussion on OpenAudit would be the business/IT models for open audit data and, more importantly, the broader question on whether provenance of data would help build trust in business.

We definitely have more questions and fewer answers at the moment. The approach of the Finance Innovation Lab is not to ask rhetorical questions but to invite individuals and organisations from diverse fields to search for the right question together. How can audit and open data help rebuild trust in business?

We believe this is a conversation worth having.

To join the discussion, please contact Martin Martinoff, project lead of AuditFutures.