The real cause for concern is a crisis of competence that is eroding customer satisfaction with external auditors in corporate America, says an April 2002 survey of companies that purchase outside accounting services conducted by NFO WorldGroup, one of the world's leading providers of research-based marketing information and counsel.

Using the NFO TRI*M Index, an innovative relationship and reputation management tool, businesses using outside auditors give the profession an overall performance score of 61 equivalent to a D grade. By comparison, general B2B services average 80 (B). Top performing businesses with the strongest relationships fall in the range of 90 to 100 (A).

Champions and critics are almost evenly divided in the tug-of-war for accounting customer satisfaction and loyalty. According to NFO WorldGroup's TRI*M research, the ratio of committed customers to unhappy customers should be about 3.1 for a company to function effectively. Highly successful B2B companies are focused on reducing their unhappy customer to less than 10 percent. The illness affecting the accounting profession isn't integrity and "Andersen-itis." The cure for the customer relationship malaise is improving performance on the factors that matter to the corporate client. Source: NFO WorldGroup, TR*M Stakeholder Relationship Management Study, April 2002.

This low rating is reflected in client evaluation of auditor performance. Fifty-five percent of the respondents ranked overall performance of their auditor as excellent or very good, compared to 70 percent to 75 percent typically seen in the professional services. Similarly, only 55 percent said they definitely or probably would recommend their auditors to business colleagues, versus 75 percent to 80-percent for the professional services category.

"These weak scores should be a clear warning bell that the accounting profession has serious, fundamental client relationship problems that are different from the issues dominating the headlines about Andersen and Enron," explained Shubhra Ramchandani, stakeholder management practice leader for North America, NFO WorldGroup, and leader of the TRI*M study. "The problem isn't integrity -- it is value. Most clients rate their outside accountants' business ethics very highly, but what they question is the performance and value of the services they receive. The NFO TRI*M research reveals some vital insights into what the profession can do to raise its D grade to an A for customer satisfaction and loyalty."

According to the TRI*M results, the respondents gave HIGH performance marks to auditors in regards to:

• "Company I can trust"
• "Employees that are committed to personal ethics"
• "Culture of business integrity"
• Commitment to "maintaining a position of independence as an auditor."

However, the industry scored AVERAGE to BELOW AVERAGE on critical performance factors like:

• "Expertise in my industry"
• "Has a staff we can rely on for providing the right advice"
• "Has a staff that is responsive to our needs"
• "Is dedicated to being a reliable advisor for the financial aspects of our business"
• "Capability to provide expert advice and insights on business risks associated with accounting treatments"
• "Has a staff that is competent in understanding complex financial structures used by some businesses"
• "Competence in recommending the right level of financial controls"
• "Readiness to address auditing needs in an environment of changing regulations"
• "Provides solutions to help us make business decisions that are in the best interests of our company and its shareholders"
• "Has the confidence of investors for providing appropriate disclosure to flag business risks"
• "Is well prepared for the future"
• "Communicates with us effectively"

"We're seeing a clear demand that auditors get back to basics, to shore up their core competencies and concentrate on delivering fundamental value to their corporate clients," Ramchandani observed. "The accounting industry has concentrated on expanding its portfolio of services, such as consulting and international support, but these do not appear to be what is motivating clients to continue their current external auditor relationships. The crisis of competence will continue to affect the accounting industry long after the big headline controversies become old news."

An example of the drive to get back to basics is corporate clients' perception of combined auditing and consulting services. The survey indicated mixed feelings about the virtues of using the same provider for both auditing and consulting.

Results showed that 35 percent of the respondents would recommend using their current outside auditor for non-auditing services to their company, but 27 percent would not and 42 percent were unsure or undecided -- a division that suggests the topic is far from clear for corporate decision-makers. Fifty percent of the companies surveyed said that they are currently using auditing and consulting from the same vendor. This indicates a strong probability that businesses will re-evaluate and possibly begin separating their suppliers of audit versus consulting services, regardless of actions taken in the regulatory arena.

The scores are based on NFO's recent survey of American corporations, zeroing in on top managers and executives with responsibility for managing auditing and consulting relationships with outside accountants. The results of the survey were compared to the NFO TRI*M database comprising results from more than 1,500 studies and 2.6 million interviews across all business sectors.