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By Luke Eaton, Communications Advisor, PASAI

Across the Pacific region the power distance dimension of culture varies. This refers to the relationships between people perceived to have different ‘statuses.’ In places with a low power distance, interactions are usually less formal and challenges to authority are normal and even expected. In places with a high power distance, there are greater sensitivities around rank.

A mysterious crash

It was a rainy night in Guam, when, in 1997, a perfectly good plane flown by well-trained pilots crashed into the top of a small hill near the airport. Hundreds of people – nearly everyone on board Korean Air Flight 801 – died on impact. I mention this because power distance probably explains this tragedy.

The plane’s cockpit voice recorder later revealed the co-pilot and flight engineer seemed reluctant to act despite their concern the captain was still relying on the plane’s autopilot function while steeply descending on that rainy night. There were several seconds of indecision after alarms sounded in the cockpit but when the captain finally turned off the autopilot it was too late. [1]

The crew members were behaving in accordance with hierarchical Korean culture and deferring to seniority. The failure to question the poor judgement of the captain was, in this and other similar cases, a fatal mistake. [2]

Implications of this cultural dynamic on audits

If you are in a high power distance culture, you probably already know the various protocols around greeting people. However, as an auditor (or fraud investigator), it is especially important not to let the seniority of auditee staff influence your careful examination of the information they provide. If discrepancies appear, you may need to overcome ingrained habits of deferring to authority. You should also pay attention to how this aspect of culture may affect an assessment of fraud risk.

An INTOSAI CBC blog post [3] put forward that auditors in a high power distance culture tend to adhere closely to procedural checklists, seeking the approval of their superiors. This comes at the expense of innovation in evidence gathering. They are also less likely to perceive power as a source of corruption, taking less scepticism into audit engagements.

Fostering a culture of review

On paper, a SAI might have the necessary powers to demand certain documents of interest or be entitled to be provided diligently prepared financial statements by a well-established deadline. However, all too often audits succeed or fail to make a timely impact based on the willingness of auditees to cooperate with the SAI. This is where good communication skills might be a benefit.

Ideally, auditees would readily understand that audits are a gift. However, many treat audits like an unwelcome provocation. It may be worth spending a little extra time explaining the benefits to the auditee and the public at large, of having a financial management system with this self-improvement function. You are like a mechanic looking under the hood and advising which parts need a tune up for a smoother ride. Perhaps you can think of a better comparison.

Of course, in the unreasonable absence of a paper trail to audit, there would be good reason to sound the alarm of high fraud risk.

SAIs should always strive to serve as model public sector agencies. On the topic of audit quality at the recent Congress, we discussed the importance of having a culture of review, challenging assumptions and continuous feedback for improvement. Quality doesn’t happen by accident. It needs systems in place and a ‘tone from the top’ that quality matters and that review is welcome. A SAI’s reputation is earned by the quality of its products and demonstrating a willingness to itself be transparent and open to improvement.

Sometimes it takes bravery to follow or give voice to your intuitions. An environment that welcomes a diversity of perspectives certainly makes the process easier. In either case, we need to avoid crashing the proverbial plane.


[1] Is culture a factor in air crashes? Guam probe may raise touchy issue
Don Phillips, Washington Post

[2] Could Malcolm Gladwell’s Theory of Cockpit Culture Apply to Asiana Crash?
Brian Clark Howard, National Geographic

[3] Power distance cultural dimension among auditors
Dr Sayed Alwee Hussnie Sayed Hussin, SAI Malaysia, Director of Policy and Internal Relations