Do markets have a DNA

I was reading the news article “Former banking bosses say ‘sorry’ ” on the BBC website.

On being pushed by the Treasury committee, Lord Stevenson, former chairman of HBOS, said the mistake the bank made was a failure to predict the credit crunch, which effectively froze access to new funds.

“The fundamental mistake of HBOS was the failure to predict the wholesale collapse of the wholesale markets,” he said.

Till now I have been reading of credit crunch and recession in the economy.

Where’s the money gone ?

I can relate the credit crunch chain of events to the Oyster Card system in London Underground when it fails due to a technical problem. It results in total chaos . There is no ticket checks since the system has failed and the gates where the card reader is installed kept open. Then there is no difference between passengers with tickets or without tickets and everyone takes a free ride.

I occasionally watch Jeremy Kylie show or Maury Show. The have gradually moved from lie detector to a DNA test to determine the truth. Today DNA test is a precise way to determine the paternity, solve crime and also trace the roots of the family.

What about the markets ? Is there no way trace the money where it has disappeared !!!

Mr Hornby conceded to the the Treasury Committee that the culture, where bankers can receive many times their salary in cash bonuses, did need to be looked at.

“The bonus system has proved to be wrong. Substantial cash bonuses do not reward the right kind of behaviour,” he said.

What has happened to the Corporate Governance Standard where there the remuneration committee decides on the pay of executive directors ? Who pays the price for the excessive risk that the executives take for the bank ?

The most appalling case is that of Satyam Computers where the Auditors (Big 4 firm) failed to notice the Cash balances on the Balance Sheet of Satyam does not exist in the bank accounts.

In all the cases, these are best of banks or auditors !!!

The questions I would like to ask:

• Is the current laws and regulators geared to determine the source of the problem ?
• Do we require techniques and technology for the market as sophisticated as DNA Tests.

Please share your thoughts on the subject and whether you are affected by the credit crunch.

Regards,

Santosh Puthran

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Financial Accounting e-book project – Dr D V Ramana & Team

Dr D V Ramana Ph.D, Professor, Accounting, Xavier Institute of Management, Bhubaneswar.

Dr. D V Ramana has converted his teaching notes into an e-book. This is opened for the students on a pilot basis to get their feedback and suggestions for improvement.

Visit http://www.accounting-ebook.com/

Unable to see the video. Click here

The e-book contains videos on various topics on finance. Dr D V Ramana would like inputs from you on this project. You will be glad to know that he is also working on IFRS e-book project.

I congratulate him for his efforts on Financial Accounting e-book and wish him All the best for his future projects.

PS: Dr Ramana is a subscriber of Management Accountant Blog. If you are interested to make a guest post on the projects you have undertaken or your article on specific topic that would help the readers, I would be happy to post the same on the blog. Please contact me.

Regards,

Santosh Puthran

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Earlier Guest Posts were made by

1. Emerging Role of Management Accountants – V R Kedia
2. Activity Based Management – Rajendra Patil of AppsConsulting
3. Business, Customer Value, Cost & Management Accounting – Devarajan Swaminathan

You may also like to read

1. Beyond Budgeting – A radical proposition
2. How to acquire Customer
3. Emerging Role of Management Accountants
4. Cultural Web – A big challenge 22-June-08
5. Activity Based Management – Dispelling the myths Part I – 13-June-08
6. 10 myths about ABC by SSRK 26-Nov-06
7. Transfer Pricing 29-Dec-06
8. Throughput Accounting 17-Dec-06
9. SSRK’s Knowledge Repository 03-Dec-06
10. Stakeholder Analysis 19-May-08
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12. Strategy Development 05-Apr-08
13. Strategic Drift 12-Apr-08
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15. Management Accountant Blog Home

Read Full Post »

Financial Accounting e-book project – Dr D V Ramana & Team

Dr D V Ramana Ph.D, Professor, Accounting, Xavier Institute of Management, Bhubaneswar.

Dr. D V Ramana has converted his teaching notes into an e-book. This is opened for the students on a pilot basis to get their feedback and suggestions for improvement.

Visit http://www.accounting-ebook.com/

Unable to see the video. Click here

The e-book contains videos on various topics on finance. Dr D V Ramana would like inputs from you on this project. You will be glad to know that he is also working on IFRS e-book project.

I congratulate him for his efforts on Financial Accounting e-book and wish him All the best for his future projects.

PS: Dr Ramana is a subscriber of Management Accountant Blog. If you are interested to make a guest post on the projects you have undertaken or your article on specific topic that would help the readers, I would be happy to post the same on the blog. Please contact me.

Regards,

Santosh Puthran

Do you like to be updated in Accountancy ?

Subscribe to Management Accountant by Email

Or

Subscribe in a reader

Visit MA Stores ? You will find something you are looking for ….

Management Accountant Store, US – Powered by Amazon
Management Accountant Store, UK Stores – Powered by Amazon, UK
Digital Store, US

Earlier Guest Posts were made by

1. Emerging Role of Management Accountants – V R Kedia
2. Activity Based Management – Rajendra Patil of AppsConsulting
3. Business, Customer Value, Cost & Management Accounting – Devarajan Swaminathan

You may also like to read

1. Beyond Budgeting – A radical proposition
2. Emerging Role of Management Accountants
3. Cultural Web – A big challenge 22-June-08
4. Activity Based Management – Dispelling the myths Part I – 13-June-08
5. Activity Based Management – How to collect info 10-June-08
6. 10 myths about ABC by SSRK 26-Nov-06
7. Transfer Pricing 29-Dec-06
8. Throughput Accounting 17-Dec-06
9. SSRK’s Knowledge Repository 03-Dec-06
10. Stakeholder Analysis 19-May-08
11. Resistance to Change 26-Apr-08
12. Strategy Development 05-Apr-08
13. Strategic Drift 12-Apr-08
14. How to Share Blog posts with friends 25-May-08
15. Management Accountant Blog Home

Read Full Post »

The Audit Cartel Prem Sikka in Guardian

Prof Prem Sikka

Never mind showbusiness, there’s no business like the accountancy business. Accountancy firms have a licence to print money because they enjoy access to a state-guaranteed market for auditing. Companies, hospitals, schools, charities, universities, trade unions and housing associations have to submit to an audit, even though the auditor might issue duff reports. Anyone refusing their services faces a prison sentence.

Major company audits are the most lucrative and that market is dominated by just four global auditing firms. PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young have global revenues of over $80 billion (£41bn) a year, which is exceeded by the gross domestic product of only 54 nation states. These firms dominate the structures that make accounting and auditing rules.

Following the Enron and WorldCom debacles and the demise of Arthur Andersen, the auditing market has become further concentrated in those four firms. Many major companies looking for global coverage find that the auditor choice is very restricted.

Click here to read Prem Sikka’s column in Guardian

Cheers,

Santosh Puthran

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1. Accountancy Profession in India 22-May-08
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11. Management Accountant Blog Home

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The Audit Cartel – Prem Sikka in Guardian

Prof Prem Sikka

Never mind showbusiness, there’s no business like the accountancy business. Accountancy firms have a licence to print money because they enjoy access to a state-guaranteed market for auditing. Companies, hospitals, schools, charities, universities, trade unions and housing associations have to submit to an audit, even though the auditor might issue duff reports. Anyone refusing their services faces a prison sentence.

Major company audits are the most lucrative and that market is dominated by just four global auditing firms. PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young have global revenues of over $80 billion (£41bn) a year, which is exceeded by the gross domestic product of only 54 nation states. These firms dominate the structures that make accounting and auditing rules.

Following the Enron and WorldCom debacles and the demise of Arthur Andersen, the auditing market has become further concentrated in those four firms. Many major companies looking for global coverage find that the auditor choice is very restricted.

Click here to read Prem Sikka’s column in Guardian

Cheers,

Santosh Puthran

Do you like to be updated in Accountancy ?

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Management Accountant Store, US – Powered by Amazon
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Digital Store, US

You may also like to read

1. Accountancy Profession in India 22-May-08
2. Corporate Governance & Audit in India 04-June-08
3. Cost Audit Awareness in India 21-Jan-07
4. Membership of Accounting Body – Value Proposition 20-Mar-08
5. Tax Cut – A simple lesson in Economics – 25-Dec-07
6. Understanding three stages of Change
7. Management Accounting Guidelines of CMA Canada
8. Activity Based Costing
9. Full Cost Accounting
10. How to Share Blog posts with friends 25-May-08
    
11. Management Accountant Blog Home

Subscribe to RSS Feeds and be up-to-date

1. Management Accountant
2. Accountancy News
3. My Favorite Blogs that I track
4. SAP Jobs & Opportunities

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Corporate Goverance in the UK

Corporate governance is the process by which companies are controlled and directed – a company’s board is ultimately responsible for this. The key to good corporate governance is having the right strategy, leadership and control structures in place to produce and sustain the delivery of value to shareholders.

Good corporate governance, and its visibility, gives confidence to all associated with a company that it is being managed well and that value is being created. Our objective in this report is to summarise the key elements of the Company’s governance structure and relate this to the principles in the UK ‘s Combined Code on Corporate Governance – a code of good practice for listed companies.

THE BOARD

“Every company should be headed by an effective board, which is collectively responsible for the success of the company.” Combined Code – Main Principle A.1

CHAIRMAN AND CHIEF EXECUTIVE

“There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.” Combined Code – Main Principle A.2

BOARD BALANCE AND INDEPENDENCE

“The Board should include a balance of executive and non-executive directors (and in particular independent non-executive directors) such not no individual or small group of individuals can dominate the board’s decision making.” Combined Code – Main Principle A.3

APPOINTMENTS TO THE BOARD

“There should be a formal rigorous and transparent procedure for the appointment of new directors to the board.” Combined Code – Main Principle A.4

INFORMATION AND PROFESSIONAL DEVELOPMENT

“The Board should be supplied in a timely manner with information in a form and of a quality to enable it to discharge its duties. All Directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.” Combined Code – Main Principle A.5

Source: Chicks drinking

PERFORMANCE EVALUATION

“The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.” Combined Code – Main Principle A.6

RE-ELECTION

“All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. The board should ensure planned and progressive refreshing of the board.” Combined Code – Main Principle A.7

FINANCIAL REPORTING

“The board should present a balanced and understandable assessment of the company’s position and prospects.” Combined Code – Main Principle C.1

INTERNAL CONTROL

” The board should maintain a sound system of internal controls to safeguard shareholders’ investments and the company’s assets.” Combined Code – Main Principle C.2

RELATIONS WITH SHAREHOLDERS

“There should be a dialogue with shareholders based on the mutual understanding of objectives. The Board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. Combined Code” – Main Principle D.1

AUDIT COMMITTEE AND AUDITORS

The board should establish formal and transparent arrangements for considering how they should apply the financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditors. Combined Code Main principle C.3

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US Stores
UK Stores
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You may also like to read

1. Combined Code of Corporate Governance
2. Honda 50cc Bike – Imposed Strategy
3. Red Monkey Innovation
4. World’s 50 most innovative companies
5. Resistance to Change
6. Strategic Drift
7. Strategic Development
8. Books of Mintzberg on Amazon
9. Books of Philip Kotler
10. Porter’s Diamond
11. Understanding Three Stages of Change

Sources:

1. Corporate Governance – BAE website
2. Corporate Governance – Invensys website
3. Corporate Governance – Wikipedia

Read Full Post »

Corporate Goverance – UK

Corporate governance is the process by which companies are controlled and directed – a company’s board is ultimately responsible for this. The key to good corporate governance is having the right strategy, leadership and control structures in place to produce and sustain the delivery of value to shareholders.

Good corporate governance, and its visibility, gives confidence to all associated with a company that it is being managed well and that value is being created. Our objective in this report is to summarise the key elements of the Company’s governance structure and relate this to the principles in the UK ‘s Combined Code on Corporate Governance – a code of good practice for listed companies.

THE BOARD

“Every company should be headed by an effective board, which is collectively responsible for the success of the company.” Combined Code – Main Principle A.1

CHAIRMAN AND CHIEF EXECUTIVE

“There should be a clear division of responsibilities at the head of the company between the running of the board and the executive responsibility for the running of the company’s business. No one individual should have unfettered powers of decision.” Combined Code – Main Principle A.2

BOARD BALANCE AND INDEPENDENCE

“The Board should include a balance of executive and non-executive directors (and in particular independent non-executive directors) such not no individual or small group of individuals can dominate the board’s decision making.” Combined Code – Main Principle A.3

APPOINTMENTS TO THE BOARD

“There should be a formal rigorous and transparent procedure for the appointment of new directors to the board.” Combined Code – Main Principle A.4

INFORMATION AND PROFESSIONAL DEVELOPMENT

“The Board should be supplied in a timely manner with information in a form and of a quality to enable it to discharge its duties. All Directors should receive induction on joining the board and should regularly update and refresh their skills and knowledge.” Combined Code – Main Principle A.5

Source: Chicks drinking

PERFORMANCE EVALUATION

“The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors.” Combined Code – Main Principle A.6

RE-ELECTION

“All directors should be submitted for re-election at regular intervals, subject to continued satisfactory performance. The board should ensure planned and progressive refreshing of the board.” Combined Code – Main Principle A.7

FINANCIAL REPORTING

“The board should present a balanced and understandable assessment of the company’s position and prospects.” Combined Code – Main Principle C.1

INTERNAL CONTROL

” The board should maintain a sound system of internal controls to safeguard shareholders’ investments and the company’s assets.” Combined Code – Main Principle C.2

RELATIONS WITH SHAREHOLDERS

“There should be a dialogue with shareholders based on the mutual understanding of objectives. The Board as a whole has responsibility for ensuring that a satisfactory dialogue with shareholders takes place. Combined Code” – Main Principle D.1

AUDIT COMMITTEE AND AUDITORS

The board should establish formal and transparent arrangements for considering how they should apply the financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditors. Combined Code Main principle C.3

Do you like to be updated in Accountancy ?

Subscribe to Management Accountant by Email

Or

Subscribe in a reader

Are you looking for something ? You will find it in MA Stores – Powered By Amazon

US Stores
UK Stores
Digital Stores, US

You may also like to read

1. Combined Code of Corporate Governance
2. Honda 50cc Bike – Imposed Strategy
3. Red Monkey Innovation
4. World’s 50 most innovative companies
5. Resistance to Change
6. Strategic Drift
7. Strategic Development
8. Books of Mintzberg on Amazon
9. Books of Philip Kotler
10. Porter’s Diamond
11. Understanding Three Stages of Change

Sources:

1. Corporate Governance – BAE website
2. Corporate Governance – Invensys website
3. Corporate Governance – Wikipedia

Read Full Post »

Protect the term accountant: News Report in UK

The ongoing debate about protecting the term ‘accountant’ has again raised its head, as a report was ‘accidentally’ posted on the ICAEW website a couple of weeks ago which laid out its plans to fragment the profession by systematically dividing it into ‘tiers’. The document, entitled ‘Report on IFA Activities’, is designed to give the ICAEW an overview of the Institute of Financial Accountants’ activities during 2007 and contains a detailed strategy regarding the structure of the accountancy profession. Not surprisingly, the report proposes that CCAB bodies, such as the ICAEW, become the top tier of the profession with only their members able to use the term ‘accountant’; financial accountants, technicians and bookkeepers would create the lower tiers.

Source: Sunset Fishing

Bodies outside of the CCAB, such as AIA, would not be included in the ICAEW’s plans, despite being one of the longest-established global accountancy organisations (this year celebrating its 80th birthday); and being a Recognised Qualifying Body (RQB) under the Companies Act 1989 with over 13,000 members and students worldwide! While we support moves to protect the term ‘accountant’, we are extremely concerned to see that this debate is being undertaken behind closed doors by parties with strong vested interests. The report puts forward the commercial benefits to the ICAEW, referring to a “strategy to gain further streams of ACA students”, but fails to address the public’s interest in the matter. The ICAEW seems to be approaching the issue as a trade body protecting its own interests, rather than promoting the wider public good.

Read Philip Turnbull reports in Accounting Web

Share your thoughts on this issue.

Do you like to be updated in Accountancy ?
Subscribe to Management Accountant by Email

Or

Subscribe in a reader

Regards,

Santosh Puthran

You may also like to read

1. The word “Chartered” – debate in India
2. Definition of Professional Body
3. Cost Audit Awareness in India

Read Full Post »

Protect the term accountant: News Report in UK

The ongoing debate about protecting the term ‘accountant’ has again raised its head, as a report was ‘accidentally’ posted on the ICAEW website a couple of weeks ago which laid out its plans to fragment the profession by systematically dividing it into ‘tiers’. The document, entitled ‘Report on IFA Activities’, is designed to give the ICAEW an overview of the Institute of Financial Accountants’ activities during 2007 and contains a detailed strategy regarding the structure of the accountancy profession. Not surprisingly, the report proposes that CCAB bodies, such as the ICAEW, become the top tier of the profession with only their members able to use the term ‘accountant’; financial accountants, technicians and bookkeepers would create the lower tiers.

Source: Sunset Fishing

Bodies outside of the CCAB, such as AIA, would not be included in the ICAEW’s plans, despite being one of the longest-established global accountancy organisations (this year celebrating its 80th birthday); and being a Recognised Qualifying Body (RQB) under the Companies Act 1989 with over 13,000 members and students worldwide! While we support moves to protect the term ‘accountant’, we are extremely concerned to see that this debate is being undertaken behind closed doors by parties with strong vested interests. The report puts forward the commercial benefits to the ICAEW, referring to a “strategy to gain further streams of ACA students”, but fails to address the public’s interest in the matter. The ICAEW seems to be approaching the issue as a trade body protecting its own interests, rather than promoting the wider public good.

Read Philip Turnbull reports in Accounting Web

Share your thoughts on this issue.

Do you like to be updated in Accountancy ?
Subscribe to Management Accountant by Email

Or

Subscribe in a reader

Regards,

Santosh Puthran

You may also like to read

1. The word “Chartered” – debate in India
2. Definition of Professional Body
3. Cost Audit Awareness in India

Read Full Post »

Ernst & Young applauds the success of the IASB

The FINANCIAL — London, The movement towards International Financial Reporting Standards (IFRS) as the leading financial reporting framework for the global capital markets has gathered pace faster than most people expected, according to Ernst & Young.

Dr. Allister Wilson of Ernst & Young says the remarkable success of the adoption of IFRS in 2005 across Europe and in other countries around the world is due to a number of factors. In particular he cites the courage, vision, and commitment shown not only by the members of the International Accounting Standards Board (IASB), but also by national governments, securities’ regulators, corporations, and the auditing profession.

Read more on FinChannel

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Regards,

Santosh Puthran

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