Sunday, February 3, 2013

CNET, CES and Crowd-sourced audits: Independence does matter

In a previous post, I looked at how the editorial interference from CBS forced CNET to award the Best in Show category to another contestant because CBS was involved in litigation against the company who actually did win best in show. The perspective that I took was more of a "decision usefulness" perspective: could a reader actually figure out who the real winner is due to the use of disclaimers. 

Others were much more outraged over this lack of objectivity. 

Since my post, Greg Sandoval, a reporter at CNET, has resigned over the controversy (click here to see his tweet).  More importantly, the Consumer Electronics Association (CEA) itselft has taken a firm stand against this move by CBS. As noted in this press release, they have effectively overturned CNET's decision and have awarded the Best in Show to both the Hopper and Razor's Edge (effectively CNET's second choice). They have also are requesting a request for proposal for "a new partner to run the Best of CES awards program". 

Looking at the heart of the issue, the question is how does one maintain independence when reporting on a matter? 

We can take a look at what the Canadian Institute of Chartered Accountants (CICA) and the Canadian Public Accountability Board (CPAB) have written about independence in this publication. On page 7, they cite the International Ethics Standards Board for Accountants (IESBA) and breakdown independence in two categories: 
  • "Independence of mind: The state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism.
  • "Independence in appearance: The avoidance of facts and circumstances that are so significant that a reasonable and informed  third party would be likely to conclude, weighing all the specific facts and circumstances, that a firm’s, or a member of the audit team’s, integrity, objectivity or professional skepticism has been compromised."
The publication also a number of threats to independence. The two probably most relevant are the "self-interest threat" and the "intimidation threat", which I think are probably most relevant to the CNET-CES controversy. Effectively, CBS's objectivity of the reporters was put aside in favour of the self-interest emanating from their litigation against DISH (who makes the Hopper). 

But the more interesting one to explore is the "intimidation threat". And this is most felt by reporters and editors who are pressured to abandon their view in favour of what the parent company wanted. And it speaks to a fundamental flaw in journalism: the press depends on money from the companies and others that they need to write about. The biggest illustration of this is what went down between Fox News and Jane Akre and Steve Wilson when they were forced to stop reporting about the health effects of drinking milk from cows that had been given Monanto's Bovine Growth Hormone. The reporters were fired when they refused to give into the "intimidation threat". They initially won their case under Florida's whistle blower law, but when Fox appealed they lost. The reason? The media has no obligation to tell the truth.  

So the challenge remains as to how does one remain independent when they need to eat and pay their bills in a free market system? Greg took the principled stance as, Jane Akre and Steve Wilson did, but not everyone can afford to pay the prices. People have to pay rent and take care of their families. The reality is that if society really cares about have access to information that has integrity they need to pay for it.

Is it time to have audited standards for the media, similar to the one used for financial information generated by financial companies? 

Although not perfect by any stretch of the imagination - the accounting scandals, a la Enron, serve as an important reminder of the lack of perfection in the system - the way financial information is subjected to testing serves at least as a starting to point as way to understand what needs to be there to ensure the information has integrity. 

Another probably more plausible approach is to leverage crowd sourcing and organize it to enable people comment or blow the whistle on information that is produced in a manner that is inaccurate, incomplete or invalid. The Guardian actually did this for the MPs expenses: they built an app that allowed ordinary users to analyze MPs expenses (if interested check out the Google Docs Spreadsheet with this info). As noted in the article, there was another attempt to build such an app (see here for the alternative). This is both good and bad. It's good in the sense that no one organization has the ability to monopolize such initiatives. However, it is bad in the sense that the efforts of the crowd are effectively divided. Regardless, it does illustrate that the potential for "crowd sourced audits". 

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