September 02, 2011

Chuck Howard: Audit Standards Should Prompt More Knowledge of Ombuds

In an article for the Hartford Business Journal, attorney Charles Howard points out that Auditing Standard 314 mandates that an auditor have a sufficient understanding of an entity and its environment to assess the risk of material misstatement of financial statements. Howard argues that auditors therefore should know more about how Organizational Ombuds help an entity surface and resolve workplace issues that might not otherwise get reported.

He offers three reasons why organizations should consider Ombuds programs:
  1. Legal developments over the past 40 years that have converged to require organizations to adhere to the law and ethical standards and to take action when they become aware of misconduct;
  2. Unprecedented diversity and other changes in the workforce; and
  3. Limitations in the existing mechanisms that discourage some employees from report misconduct and resolving conflict, especially fear of retaliation.
Howard also offers an example of how an Ombuds can help an auditor surface an organizational issue.

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