financial windfall for CPA firms ?


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P

Paul A. Thomas

Jim Hudspeth said:
One thing we need to keep in mind, however; no internal control can
keep top management honest. In order to deal with that problem we must
create an audit environment in which auditors can ask the tough questions
and follow up forcefully if necessary.

We need the "Audit Police".

Give us badges and guns.

Or not.

--
Paul A. Thomas, CPA
Athens, Georgia
(e-mail address removed)
WARNING: This post may contain violent
punctuation, explicit grammatical errors,
and a shocking ending with a preposition.
 
A

A. L. Meyers

Paul A. Thomas said:
We need the "Audit Police".

Give us badges and guns.

Or not.
On the basic underlying issue here yours truly tends to agree
(exceptionally ;-) ) with Mr. Ron Todd. Regardless of how many layers
of controls one puts on and regardless of the resources invested,
people remain corruptible or, if you prefer, "influenceable". There is
ultimately no substitute for personal integrity and civil courage.

This being said, however, some environments encourage these qualities
while others discourage or even punish them. We have seen a lot of the
latter during the last 30 years or so.

Simply put, non-observance of the "golden rule" is a boomerage which -
sooner or later, in one form or another - returns to its originator.

The corruptibility, or rather pervasive internal ethical corruption of
people "to the bone marrow" was one of the central themes of the last
century's literature, at least here in Europe. "Ugly" souls cannot
produce beautiful works of art, a fact that partially explains the
dearth of such works during the last century compared to the prior two.

Concerning accountancy, yours truly seriously doubts that the last
century's main "achievement" - replacement of the cash basis by the
accrual basis - was in fact a positive development.

A. Lucien Meyers, CIA, CMA
 
J

Jim Hudspeth

Regardless of how many layers
of controls one puts on and regardless of the resources invested,
people remain corruptible or, if you prefer, "influenceable". There is
ultimately no substitute for personal integrity and civil courage.

This being said, however, some environments encourage these qualities
while others discourage or even punish them. We have seen a lot of the
latter during the last 30 years or so.

Simply put, non-observance of the "golden rule" is a boomerage which -
sooner or later, in one form or another - returns to its originator.
Lucien has captured the essence of what I've been trying to say.

Autitors do not need badges and guns. What they do need is a real committment
to "tell it like it is"; a realization that top management may be corrupt; and
an environment that does not encourage turning a blind eye to executive
corruption.

Can we get there from here?

Ron Todd and Lucien seem to think not. They may be right. If they are, our
grandchildren will inherit a far more dysfunctional world than the one we
inherited.

Life in a connected world requires a lot of trust, and trust is far easier
lost than gained. A lot of our recent efforts at reform seem to be nothing
more than an effort to quietly continue the scam; restore trust with some
soothing words and continue the rip offs. That will work in some situations,
however in the end it will only result in a more disasterous fall.

I am not suggesting that we attempt to reform human nature. I am suggesting
that we work toward a world that does not grossly discourage personal integrity
and civil courage.

Jim Hudspeth
 
R

Ron Todd

We need the "Audit Police".

Give us badges and guns.
Omygosh.

Reminds me of, June Gibbs Brown, I think, and the concept of the
Audigator. All the skills of an auditor and investigator rapped up in
one Federal Agent with a shield and an issued Smilth & Wesson. (I
think the mechanism was to take GS--511 Auditors and train them as
investigators.) I think the concept floated around for about a year,
it might even have made it's way out of Interior. AIR, the
Investigators, GS-1800 something series did not like the idea.

I am pretty sure everyone decided that it was better to have people
who were specialized in audit and others who were specialized in
investigation and have the two groups COMMUNICATE. In my experience
most of the communication blocks were in the higher levels, GS-15 and
SES. I imagine the problems are the same in the private sector.


Best Regards.

*****************************************
Boycott list:

Belgium, France, Germany, Finland, Sweden, Switzerland, PRC, Iran, Syria,
Hollywood, San Francisco, Massachusetts, New York City, Sierra Club, ACLU,
Movies of the first blacklist, Turner, Madonna, S. Crowe, Dixie Chicks, Cher, U2, rapp,
Trudeau, W.Miller, Disney, ABC news, CBS news, NBC news, CNN, PBS,

Sometimes the only influence you have is to say, "No, I'm not buying."

For those who are unclear about the situation, California is the Clinton - Davis model for the rest of the United States of America.
 
A

A. L. Meyers

Neutralization of auditors in the private sector tends to be more
subtle. The result is effective prevention or at least minimalization
of substantive testing, often in the name of "soft factors" and / or
"reduction of audit expense".

IMHO a useful measure of audit effectiveness is substantive testing
hours / total hours. Little or no substantive testing means little or
no audit.

A. Lucien Meyers, CIA, CMA
 
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J

Jeff Chapman

.... in the race for money, some men come out first, but Man comes out last.

It's been this way for millions of years. And yet I do see some positive
signs, for example Calpers (the California public employees pension fund)
has been recently applying pressure that apparently changes the behavior of
some firms:

http://www.calpers-governance.org/alert/focus/

We need more investment managers to become actively involved in deciding
corporate policy. If indeed it is the money that "talks," then the loudest
players are most surely the pension funds.

-- Jeff

-------- original message --------
 
R

Ron Todd

... in the race for money, some men come out first, but Man comes out last.

It's been this way for millions of years. And yet I do see some positive
signs, for example Calpers (the California public employees pension fund)
has been recently applying pressure that apparently changes the behavior of
some firms:

http://www.calpers-governance.org/alert/focus/

We need more investment managers to become actively involved in deciding
corporate policy. If indeed it is the money that "talks," then the loudest
players are most surely the pension funds.
The Sunday Bee is a prime reason why non of these thing work. Calpers
is now underfunded by "at least" $500,000,000 usd a year. Why,
because the Calpers, Davis, Democrats, and Republicans 'couldn't
believe that the stock market could tank for three continuous years.'
And, since they had all that 'excessive' fund balance at the market
peak it just seemed fair to dump the funds on all these fine union
people who's leaders had contributed so much to so many political
campaigns.



Best Regards.

*****************************************
Boycott list:

Belgium, France, Germany, Finland, Sweden, Switzerland, PRC, Iran, Syria,
Hollywood, San Francisco, Massachusetts, New York City, Sierra Club, ACLU,
Movies of the first blacklist, Turner, Madonna, S. Crowe, Dixie Chicks, Cher, U2, rapp,
Trudeau, W.Miller, Disney, ABC news, CBS news, NBC news, CNN, PBS,

Sometimes the only influence you have is to say, "No, I'm not buying."

For those who are unclear about the situation, California is the Clinton - Davis model for the rest of the United States of America.
 
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J

Jeff Chapman

Hi Ron,

Yes, well the whole business of pension fund investing is a tricky business.
Obviously Calpers has some fiduciary responsibility to invest their
pensioner's funds in a way that appropriately maximizes return at a risk
acceptable to the beneficiaries, and yet they can't please everybody. What
is an appropriate investment for a married 30-year old with two young kids
isn't necessarily an appropriate investment for a divorced 55-year old; I
don't know if a large public fund "tranches" their investments to protect
those who might prefer less risk. That's still a somewhat different topic
though than asking a pension fund to use its considerable leverage to sway
corporate governance, although it does raise the parallel query of who
should apply leverage to insure appropriate pension fund governance!

Best,

Jeff

--------- original message ---------
 

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