Purchase to pay and the other side of transparency

Purchase to pay and the other side of transparency

Posted by Pete Loughlin in Purchase to Pay, Purchase to Pay Process 23 Jul 2013

A few years ago, I was walking down the street in Rugby, England when I heard a load voice shout “Pick that up!” The voice coming from a loud speaker high up on a lamp post. Some kids were hanging around and one of them had dropped litter. I didn’t know until then that the CCTV camera footage was being monitored in real time. This is in the UK and I had thought, naively it seems, that CTV cameras in the street were there to help find missing kids and catch rapists. I abhor litter louts as much as anyone but a surveillance state seems like a bit of a heavy handed approach to keeping the streets clean.

A few months later, I was in a cab in Oslo, Norway. There was a small camera pointed at me throughout the journey. I asked and the driver explained that all cabs have these cameras. The video footage is never looked at unless there’s an incident – in which case, relevant footage will be examined. Seems like a great idea to me.

Now you may ask, why am I bothered about a camera in the street but not a camera in the cab? Actually, it’s for the same reason that I have a problem with Sarbanes Oxley and the growing cult of transparency.

Purchasing Insight logoEdward Snowden is seen as a hero to many. I think he’s somewhat misguided but I am pleased that through his actions, we all got to know, or had our suspicions confirmed, that the US government is watching its citizens and, it seems, its allies overseas, without the consent that the observed might have expected. Snowden acted like a spy but many fall short of accusing him of being a traitor because he lifted the lid on something that he thought was in the public interest. Transparency is a good thing – isn’t it?

Bono famously said: “The biggest disease of all is corruption and the vaccine is transparency.” Who could disagree? Well I would for one. Let me explain.

Transparency is clearly important. When, in a democracy, we vote in our governments, we are trusting them to govern wisely. But we’re not handing over a blank check. It’s important that debates are held and decisions are made in the open. Dealings behind closed doors encourages self interest and raises suspicion. But there is a line to be drawn. I feel much safer not knowing and feeling assured that others don’t know the techniques our secret services employ to monitor terrorist communications. If I knew how they did it, the terrorists would know. I am happy for that part of government to be kept under wraps. But there are those, like Snowden’s supporters that seem to believe nothing should be opaque.

It extends to business too. Following Enron, something had to be done and it was absolutely right and proper that large corporations opened themselves to scrutiny. But transparency in everything? Where do you draw the line?

Too much transparency can act as a time consuming and expensive distraction from core business activities. Purchase to pay is rightly seen as a focus for control and transparency because of the opportunity for fraud but even there, it can go over the top. It seems that there is a growing view that there can never be too much and efforts and resources are diverted from day to day processes to satisfy the requirements of the auditors.

I’ve seen businesses with P2P process held together with string and sticking plaster. When fraud happens there’s a carpet (that no one talks about) that they sweep it under. The purchase to pay processes barely meet the basic requirements of  common sense but their SOX compliance is spot on. They struggle to resource important projects yet there are times they can barely walk in a straight line without bumping into an auditor.

I’ve always felt that the time to worry about a business is when they build a fountain out front. It’s also worrying when the finance team grows out of proportion to the business but when there’s more auditors than accountants, you know the tail has started to wag the dog.

The intelligent position on transparency is to recognize that there is a need for balance – the debate is all about where to draw the line and how and where to put controls in place that support the freedom of business or government to perform their jobs unfettered by the distractions and expense of transparency. Of having to explain yourself all the time. Whether or not things are going well.

It’s not transparency that we need – it’s trust and accountability that we need. We need to trust governments more. We need to trust business leaders more but they also need to be accountable. Like the trust we put in an airline pilot and the accountability of a black box recorder. If we don’t trust our politicians, if we don’t trust our business leaders – don’t just watch them more closely – fire them – and replace them with someone we do trust.

Pete Loughlin can be found on twitter @peteloughlin

  • john mardle July 24, 2013 at 9:20 am /

    Absolutely right. And with trust comes responsibility and then the accounting profession can drop the ‘professional’ piece and deliver real accounts that reflect true processes.

  • Rosemary R. Tlhagwane July 24, 2013 at 9:57 am /

    Very true TRUST is the key word in any transaction and any relationship – business or family, but it must be earned. do not just expect people to trust when you can not trust yourself. If they are trust worthy fire them period.

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