Face saving is a challenge for audits in China

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Chinese culture avoids direct confrontation between people : it is face saving. In the context of an internal audit, this accentuates the management difficulty to accept sensitive audit findings.

This Confucian culture of face saving, well known and real, is about respect of the image (the “face”) of the person. Direct criticism is not socially accepted among people of “equal level”.

Face saving is deeply inserted in the Chinese culture like during childhood. For example at school, a student who does not give a correct answer will not be mocked by the other students. If this happens, the teacher will punish the mocking students. In an audit context, relationships will be subject to face saving issues. It will be necessary to address sensitive points without undermining the image of the auditees, either in interviews or in the audit report.

It is interesting to note that face saving is subtlety reflected in the Chinese language: the NO and YES do not exist ! The answer needs to be built with the original verb, using if necessary the NOT. For instance “are you hungry” can be answered by “i am” or “i am not”. The face saving requires also to build more elaborate answers. If the YES and NO do not exist, there are many ways to accept or refuse an invitation. Depending on the nature of the answer, it will be clearly interpreted as a YES or a NO.

Moreover, relations in China are very respectful of the hierarchy; even more than in traditional countries such as France.

Subordinates interpret the decisions and management instructions as orders that do not qualify for criticism. Therefore, in the context of an audit, it will be very difficult to collect critical information from the respondents. This poses a real problem since in any audit, oral information collected through interviews are essential to direct auditors research.

Respect is reflected in all aspects of the professional and personal life. The Chinese language includes many words helping this respectful relation. For instance within a family everyone has a place and a unique name: elder brother, younger brother, elder sister, younger sister, etc.

International auditors may not be in a position to challenge senior management objectives.

For internal auditors, analysis and challenge of the management decision poses a more serious problem than in Western countries. This might not be possible to conduct in China, depending on the culture of the company.

Note that in a hierarchical relationship, the issue regarding Chinese image mentioned above disappears: the boss may criticize subordinates without regard !

International auditors may use cautiously the Chinese internal control system results. In a face saving culture that avoids confrontation, the Chinese internal control systems generally exclude from their scope the area of the decisions of their top management.

A purely negative response in a control that presents important issues is rare. It would not be acceptable or even could be interpreted as a direct offense to the hierarchical level.

Chinese audit and internal control often limit themselves to accounting and financial aspects. Moreover, in case of sensitive observation involving the management, the results are rarely clearly negative: the answers are very nuanced. In case of use of Chinese internal control documents, editorial subtleties will be be hard to capture in translations. There can be omissions of sensitive topics, or cases of using deliberately vague words or having a second meaning.

For instance it is common on the internet and social networks to wisdom avoidance of confrontation. Certain words are banned or censored by the authorities: they are replaced by known-of-all-expressions, for circumventing the ban. As Chinese proverb says: “Top (the government) defines laws, bottom (the people) to find a solution (bypass).”

International auditors should beware that, during interviews, the response made by the auditee can be strongly influenced by the context. Auditors have to take this in consideration within their questioning strategy.

This is not always the direct answer to the question that matters, it is the way and the context of the answer that matters. The chronology of the facts and issues is also important.

For example, I remember an interview with a senior manager who made an opposite answers to the same question that I asked earlier. I understood that the course of the interview had helped him to make the second answer acceptable because of what had been said before.

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