November 2007

If I've got this right…

November 26, 2007 General

If I’ve understood Francine McKenna correctly, she is saying that because of the way US based auditors are using client-attorney privilege, it is almost impossible to say with any degree of certainty that independent audits are indeed audits or, for that matter, independent…. I suspect that other stakeholders are on an unheard collision course with both the managements of audit firms and the companies they audit…. Except if SEC investigators find they are abusing their position to the public detriment (however that gets defined and with stiff penalties.) If you can’t be sued then you’ve got a cast iron shield that should make you fearless and not fearful. The alternative – if it is ever possible – is that somewhere along the line, one of the Big Four wakes up and remembers why Anderson WAS a great firm…. Ever tending and nurturing their talent to believe in a system rooted in scrupulous behaviour, they turned out professionals in every sense of the word. Something went wrong and it’s called greed, coupled with the arrogance that they could get away with it and compounded by the ignorance of a day one intern…. I prefer to argue the Big Four have been walking towards this zero sum game for enough years to know that something has to be done – or collectively implode.

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Missed it Richard!

November 26, 2007 General

Richard Murphy’s tongue in cheek account of a money laundering case appeal in Jersey missed the most important point. To quote from Richard’s piece: But now he’s appealed, and the grounds for his appeal could only have arisen in Jersey. He is claiming that the Judge who heard his case, Sir Geoffrey Nice was biased because he didn’t like tax havens. According to a recent Jersey Evening Post report (sorry, as ever with them, no web link): Advocate Le Quesne (defending) said there was a possibility of unfairness of a trial of someone in a tax haven if the judge did not have a high opinion of tax havens. He added: The judge appears to have demonstrated his view of offshore finance centres and his view of those who operate in offshore finance centres. It was quite clear that the judge was unhappy with the concept of anybody doing anything other than paying whatever tax is due of them – even tax avoidance appears to be something the judge disliked. In other words, the defendant’s argument makes a direct link between tax havens and tax avoidance in the context of a crime – money laundering. Having made the link, it is going to be very hard indeed for Jersey legislators and politicians to argue it is not aiding criminal acts – a key plank in the fight against economic crime.

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Another one bites the dust

November 26, 2007 General

The first thing that I did when I wanted to start my own practice was to search the market for a software line that I wanted to represent, because my forte is the software…. I was coming from the same Oracle background as the NetSuite founders, so I understood immediately the values with which they designed the software…. Even more unfortunate is the number of small businesses that I encounter on a regular basis who really struggle with some aspect of business…. Of course, it helps if you understand the debits and credits enough to carry on a meaningful discussion of how the business is doing. But there are so many other things to consider, like how are you going to attract interest and turn that interest into cash…. This work is some of the toughest in business because it is more ambiguous, less easily understood than accounting; more of an art than a science in many respects…. Time and again I hear the tired advice that all business people should be able to run an accounting system as though it was easy as falling off a log…. But then how many have the capability to provide a service that provides real-time data access through which to do so for those of our clients who can keep a set of records?

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Santa Claus, transparency style

November 26, 2007 General

Courtesy of a link thrown by Thomas Otter. Nice one.

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Zoho Writer gets the offline treatment

November 26, 2007 General

Zoho has taken another step in providing offline capability with the announcement that users can now edit word processing documents offline. I’m a bit of a fan of Zoho because I see it as the most ‘complete’ office productivity service provider – by which I mean breadth of coverage rather than feature complete. Adding offline capability will be welcome for those working on documents online who need to take away and perhaps review. The solution isn’t perfect and is limited to Writer but as TechCrunch says – Zoho is ahead of the pack – even the mighty Google. You can’t ‘save as’ to create a new version of a document but only save the original document. As far as I can tell you can’t create a new document in offline mode either. It’s also not clear whether the online version is locked while you work offline…. For those who are working on documents but need to be offline for any period of time then Zoho has taken another positive step forward in the blurring of the lines between online and offline worlds.

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PwC CEO heading up World Business Council for Sustainable Development

November 26, 2007 Featured

The press release says: Mr. DiPiazza said he would bring an independent mindset and a wide international and cross-industry perspective to help the WBCSD. With increasing public concern about the environment and the growing gap between have and have-nots, business, government and civil society must address these challenges together. Independent – now there’s a big word and not one I’d expect to see applied to PwC which, along with the other members of the Big Four cartel has a lock on how issues like ‘sustainability’ are defined…. Regardless of the brand position, fact remains the Big Four spend more time acting in the interests of a sliver of all stakeholders…. They won’t include indirect stakeholders like the smaller shareholder, labour organizations and the like where I suspect the answer might be very different…. JTurquey makes the point well: Mr. DiPiazza’s firm must be an example: there must be no gap between what is said or communicated and what is enforced or implemented all the more than when dysfunctions are public and/or official. The differences between PwC separate and independent legal entities in the definition of topics like CSR wants clarifying: Luxembourg, the small place where everybody knows everyone, is a telling example. So wants clarfying the censorship on sensitive issues like economic crime where Luxembourg is as well a telling example as auditors’ independance is not sought but steady growth is.

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New roles at Skype/PayPal – parse with care

November 26, 2007 General

The FT is announcing a couple of new jobs at Skype/PayPal. The job titles sound interesting: US GAAP Business Partner and Compliance but it is in the descriptions that things get a bit murky: The role includes interfacing with the business to understand objectives of new deals prior to signing (or new business models prior implementation) to proactively structure transactions to maximise operating and accounting goals, presenting conclusions to External Auditors to ensure compliance with US GAAP and SEC reporting requirements, presenting impact to top finance management and proactively seeking areas of judgment that need focus in order to avoid any unexpected accounting outcome in the future. The problem is one of location (at least for one role.) Luxembourg has one of the most secretive banking frameworks around. How will it be possible for what is in effect a compliance position to discuss structures without considering the tax consequences? A clue might come from the phrase ‘unexpected accounting outcome.’

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Stupidity

November 25, 2007 General

Stupid email of the week.

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In Berlin with Transparency International

November 22, 2007 Featured

I’ve been in Berlin this week, visiting with Transparency International, SAP’s CSR team including James Farrar, Redmonk’s James Governor and SAP solutions architect Thomas Otter…. Since I know they have a stronger focus on government than business, I was keen to emphasize the role Richard Murphy has played in shaping opinion around the non-dom tax issue and how that has changed since he started blogging (as an example.) I also spoke about the question of relevance in the wider conversations around topics of importance and especially the ethical debate which I believe is a central issue for the profession…. To give you a flavour of what this means, James Farrar recently reported on a meeting he had at the House of Lords and which he entitled Corruption in the UK not UK and WIKILEAKS: I see corruption as the sharp end of the sustainability debate and a huge, clear and present governance risk for business under current law mostly oriented around the US Foreign Corrupt Practices Act and nation states ratifying the 1997 OECD Convention…. That was a welcome surprise for me because I take it as an indication of how important TI sees new technology in the context of communicating its message and maintaining its influence in the world…. While I am not entirely aligned with TI’s position on corruption, (I don’t see them as taking as tough a position on business as I’d like) the people I met are first class thinkers making powerful arguments…. Working alongside NGOs like TI provides SAP with the necessary insights to do something about that and deliver to some of the world’s most important companies…. I hope they will choose to act upon the ideas we presented because the issues we skated over are some of the most difficult yet important the profession has to face.

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The people have spoken – will HMRC listen?

November 21, 2007 General

In the court of public opinion – or at least the one currently being run by the BBC, the fiasco over the catastrophic loss of personal data for 25 million citizens now stands at 4,809 comments. Even the so called A-list bloggers would struggle to get that level of reaction to an event that is bound to have significant repercussions across many government sponsored IT projects…. That matters because as one reader says: I can only echo the sentiments of everyone else…. The size of this blunder can’t be under-estimated, this is 25 million people we’re talking about, almost half the population!! Surely no one can have any confidence left in this government and its ability to fulfil its primary obligation, which is to protect the citizens of this country…. When government gets something wrong as basic as the transmission of data from one department to another, then you have to be concerned about IT governance…. This is particularly worrying for professionals who have already endured continuing problems with online filing. Perhaps now is the time for HMRC to step back and evaluate what’s really going on. These kinds of failure in process and quality cannot be allowed to continue ad infinitum.

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