In checking, we trust

The Audit Society
November 21, 1997

The most boring practices, Michel Foucault has argued, can play an unacknowledged but fundamental role in society. So it is with the practice of audit. The rise of auditing has its roots in political demands for accountability and control and the process of audit has come to affect almost every sphere of modern life. Academics are, more perhaps than any other profession, familiar with the demands of audit and monitoring. But auditing has become an important means of regulating all of the professions, and it has had the effect of undermining the traditional virtues associated with professionalism.

Auditing, however, is not a neutral process. It imposes its own values on the activities which it regulates, and this means that the process can have unintended and indeed dysfunctional consequences. The purpose of The Audit Society is to identify these consequences. Michael Power is professor of accounting at the London School of Economics and Political Science, having formerly worked as a financial auditor with Coopers and Lybrand. He has written "a book about auditing which does not tell you how to do one or how to pass an examination". It is directed at a broader audience than professional auditors and accountants and its original approach yields a book which will be of great value to political scientists. It is a book that deserves to be widely read and one which repays careful reflection.

The audit explosion, Power argues, "suggests the pathologicality of excessive checking - four people come to perform a cooperative task, say, loading trucks," and "find that the risk of any one of them slacking is such that they hire a fifth to monitor their work". We come to check our restaurant bill or bank statement only when we cease to trust. Yet it is impossible to imagine "a society where nothing is trusted and everything checked". We seem, however, to have no clear criterion of what should be checked and what should be taken on trust. We can, therefore, have no confidence that our present boundaries between checking and trusting are the right ones. Perhaps, pace John Major, we ought to trust a little more and check a little less.

The audit explosion has been caused, Power believes, by three factors: the need for fiscal restraint, an ideological commitment on the part of neo-liberals to a reduction in the size of the public sector and, most important perhaps, the New Public Management, which "claims to speak on behalf of taxpayers and consumers and against cosy cultures of professional self-regulation. Taxpayers and citizens, rather like shareholders, are the mythical reference points which give the New Public Management its whole purpose."

But the trouble is that political processes often do not generate clear objectives against which effectiveness can be judged. Moreover, it is often difficult to distinguish, for example, in the field of child support, between the effectiveness of the means adopted by government and whether the policy itself is worthwhile. Where this is so, then, the audit process can easily become "a process of defining and operationalising measures of performance for the audited entity". Thus, "the efficiency and effectiveness of organisations is not so much verified as constructed around the audit process itself". Moreover, according to many of the protagonists of the New Public Management, the market alone should judge organisational performance. But, if that were so, there would be no need for audit. Thus, the audit explosion "suggests the artificial nature of many of the new 'markets' which have been created" in the public sector. In fact, much of the programme of the New Public Management has been driven less by a sober, objective study of efficiency than by an unsophisticated faith in modern management methods. Management, Power argues, "has emerged as a portable technical skill", divorced from specialised experience and knowledge. It has become the philosophers' stone of modern government, something endlessly sought but never discovered.

Power gives a number of examples of the distortions induced by the audit explosion. Perhaps the most interesting is the auditing of academic research. The research assessment exercise offers incentives for academics to teach less and write more. Academic staff are encouraged to engage in research and there has become a visible transfer market for prolific researchers, "which only increases the costs of research as a whole". Yet, some of those engaging in academic research for the first time may be ill suited to it, and might contribute more to the common good were they to spend more of their time in teaching. Moreover, the RAE militates against the differentiation or diversification of universities; it encourages all universities to seek to become Harvard or Yale, although the need may well be for more to become like Pomona or Williams College.

Nor is the RAE neutral in terms of what academic research is done. For, "cycles of research have changed in favour of publication in prestigious journals rather than books". There are now, apparently, half a million scholarly journals in existence - to whose benefit, one wonders. At the same time, "a whole menu of activities for which performance measures have not been devised have ceased to have official value. Editing books, organising conferences and, paradoxically, reviewing and facilitating the publication efforts of others fall out of account". It is little wonder that American educational sociologist Martin Trow finds British governments to be motivated more by a desire to control the academic community than by any urge to secure quality. Significantly, the Dearing committee on higher education contained no academics currently researching in the humanities, pure science or the social sciences. Auditing in higher education, Power concurs, has the effect not of encouraging learning but of subjecting academics to unnecessary controls.

In theory, of course, representatives of the universities could be relied upon to keep audit within its proper bounds. But the poor creatures who form the Committee of Vice Chancellors and Principals are more concerned to stand well with government than to defend the universities, more concerned with their knighthoods than with the health of the institutions under their care.

Audit, then, subtly distorts the purposes of the organisations to which it is applied. In higher education, it gives prestige to philistines while encouraging research which no one wants. Under the guise of the New Public Management, it implies that government can be run like a business, ignoring constitutional conventions such as accountability to Parliament, which differentiate the political process from the processes of private management. Power's conclusion, then, is that the audit explosion is unlikely to contribute either to greater transparency or to greater democracy. Instead, "political accountability to the electorate has been more explicitly supplemented, if not displaced, by managerial conceptions of accountability embracing the need to deliver value for money". It is a magisterial conclusion, but one difficult to quarrel with.

The Audit Society, however, has one crucial weakness. It has only 147 pages of text, and Power will insist on telling us what he intends to say before saying it, and then telling us again what he has said. The main defect of The Audit Society is that it is far too short.

Vernon Bogdanor is professor of government, University of Oxford.

The Audit Society: Rituals of Verification

Author - Michael Power
ISBN - 0 19 828947 2
Publisher - Oxford University Press
Price - £19.99
Pages - 178

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