IN A WORLD MORE VOLATILE THAN EVER, THIS BOOK COMES OUT AT THE PERFECT TIME TO DISCUSS THE ISSUES AND TOOLS FOR MANAGEMENT, FINANCIAL AND EXTRA-FINANCIAL REPORTING IN ORDER TO BETTER APPRECIATE THE PERFORMANCE AND RESILIENCE OF BUSINESSES. IT ALSO PRESENTS RECENT DEVELOPMENTS IN THE AUDITING PROFESSION.

By Jean-Michel Huet (MiM ’97), Isabelle Tracq-Sengeissen (MiM ’90) and Édouard Bucaille (MiM ’91)

AUDIT AND PERFORMANCE: THROUGHOUT THE HISTORY OF ECONOMICS

Controlling public accounts is a very old practice. It appeared in pharaonic Egypt, then during the Zhou dynasty in China; it was used in the Greek Republic (particularly for tax and duty management) and by the Roman Empire to control its provinces. Auditing businesses or private actors developed in the 12^th century. Ibn Abdun wrote about the control system used for vendors and artisans in Sevilla starting in the 12^th century. In England in the 13^th century, the word “audit” appeared, even if it comes from Latin3. King Edward the First of England thus adopted the term “auditors” in 13424. Italy is one of the countries where the practice developed quickly from this period onward. Fibonacci was the auditor of the municipality of Pisa. Venice implemented a system of variable payment for auditors discovering errors. In France, it was Colbert who, in 1673, required business owners to keep accounts. But it would take until the first Industrial Revolution and a series of bankruptcies in England again before the profession really started to take form with the purpose of providing independent evaluation of a business’ accounts. The law from 23 May 1863 marks the start of auditing in France, and it was the 1929 crash that brought about the development of the internal audit (5).

AUDIT AND PERFORMANCE: A LONG CALM PATH OF INCREASED CHANGE IN THE 21^ST CENTURY

The first two decades of the 21^st century brought on developments in how performance is analysed and how the associated control professions are performed. During this time, several trends began to form.

First, there was the development of new standards that had an impact on performance assessment (IFRS standards) and the regulation of auditing activity with a major focus on greater independence.

Like the rest of the business environment, digital technology has had a huge impact, already in the way performance is monitored for businesses through new tools (war rooms, multi-dimensional dashboards on iPads) and new capabilities with the use of big data in the analysis of a company’s financial data. Controls and auditing have also had to adapt by using digital tools and adapting the controls to the increased role of digitalisation in businesses.

In addition, performance monitoring expanded beyond its single financial scope to incorporate other functional aspects of the business. At the same time, the development of auditing and performance analyses in extra-financial fields also grew.

A BOOK TO APPRECIATE THESE DIFFERENT ASPECTS

This is the third book written by a group made up of NEOMA Business School professors and graduates. We organised this book around two major areas of focus. The first area handles the issues in performance management in the different business fields (general management, financial management, commercial management, human resources, or any operational management). The second part looks at the changes in auditing with the changes in standards and indicators, the adaptation to the different sizes of the audited entities, the stakes in digital technology and the awareness given to CSR. This part draws the book to a close by considering the performance of the auditors themselves, which brings things full circle.

1- Michel Drancourt, Leçon d’histoire de l’entreprise de l’antiquité à nos jours, PUF, 2002, 333 p.

2- Georges Ifrah, Histoire universelle des chiffres, Robert Lafont, 1994, Vol. 1, 1042 p. and Vol. 2, 1010 p.

3- From audire, to listen, used also to indicate the control of governors for the Roman Emperor. In the 1980s, the term “verification” was proposed in Canada, but the term “audit” finally overtook it during the 2010s.

4- Jean-Guy Degos, Histoire de la comptabilité, PUF, 1998, 128 p.

5- Pierre Loyer, L’indépendance des auditeurs financiers : une approche des facteurs déterminants, doctoral thesis, Lille 1 University of Science and Technologies, 2006, 429 p.

Authors of Audit et Performance

• Jean-François Serval (PGE 67), president, Serval & Associés
• Christine Marcouyoux (PGE 76), partner, Productis
• Isabelle Tracq-Sengeissen (PGE 90), partner, EY
• Édouard Bucaille (PGE 91), director of financial integration projects, Engie
• Jean-Michel Huet (PGE 97), partner, BearingPoint
• Cédric Dapsens (MBA FT 98), DRH, Cepheid
• Laurent Gateau (PGE 03), Finance & Strategy, Banque centrale du Luxembourg
• Éric Villette (EMGE 13), project director, Aximum-Colas
• Alexis Lemaitre (PGE 17), auditor, PwC
• Charles Daussy, professor of management control, head of MSc Accounting, Auditing & Advisory at NEOMA Business School
• Imène Haouet, head of the preparatory year for the MS/MSc, NEOMA Business School
• Frédéric Lainé, partner, Productis
• Isabelle Miroir-Lair, professor of management control, NEOMA Business School
• Maria Ruiz-Garcia, professor of Finance and head of MSc Finance, Investment & Wealth Management, Neoma Business School
• Nathalie Subtil-Geeraerts, head of theAccounting, Controlling and Legal Affairs academic department, NEOMA Business School

Preface by Agnès Hussherr (PGE 89), Clients, Market and Innovation Leader, PwC

All of the book’s sales royalties are given to the NEOMA Foundation

The authors presented the book during a round table on 17 November.