I’ve spent a lot of time the last couple of weeks following events in the US and in particular the US elections. Normally this would be of no interest to me but the Internet allows me the opportunity to gain a ringside seat to the debates going on right now. This is augmented by a variety of additional services, most based around Twitter, that let me tap into what a (small) part of the US population thinks about these issues.
As I suspected, the vast majority of vocal critics – at least those I follow – are liberal thinkers with a social conscience. This should not be a surprise because the tech sector is concentrated around the coastal areas of the US where there is plenty of support for this style of thinking. What is perhaps different is that technologies like Twitter, Ustream and other streaming media services allow us to see and participate in the action. After last evening’s debate for instance, the Steve Gillmor’s NewsGang debated the debate. For an observer like myself, it is fascinating stuff. Why should anyone care?
A lot of the major topics will be familiar to UK readers: healthcare, education, foreign affairs and economics. The economy is top of mind for many Americans as they brace themselves for what many believe could be a depression. It’s interesting that so few are talking with any degree of confidence. This is not hard to understand given the ossified state of the capital markets.
Only yesterday, one of my US colleagues called to find out how I’m fixed for projects going forward as there is genuine fear that many engagements will either be canned or put on indefinite hold. As someone who trudged through the 2001-4 ‘nuclear winter‘ I’ve learned the hard way that cash is king.
It seems to me that few politicians have much idea how to get the US out of the sudden and dramatic decline in the economy. Structural change of a kind we’ve not seen before needs to occur. There is much talk about the role of regulation. This morning another colleague and I discussed how we move forward in terms of figuring out how to measure ‘value.’ Next week I am discussing this topic in the context of governance, risk and compliance in Berlin.
Most colleagues are of the opinion that adding regulation will only make the matter worse. I’m of a different mind. I believe that a succession of lawsuits will act as the trigger for change. It will mean a scrapping of much that accountants hold dear. Especially in the field of audit. It will mean a replacement of legislation and regulation and a reframing of the way in which oversight is conducted.
While I agree with others that government is very poor at making this kind of legislation workable, I do think a legally mandated form of oversight is required that recognizes the value market analysts who are truly independent can bring. This is not a trivial undertaking, neither will it happen in the immediate future. But happen it must if we are to be relieved of the outdated burden of ticklists and rote audit. It is no longer serving the interests of anyone except the $85 billion a year audit industry. I would not go as far as Prem Sikka in suggesting that direct government oversight is the answer But it can and should be the facilitator of a root and branch overhaul. Of course the Big Four will object, backed by FASB. But I suspect that sentiment is against them.
Last week, the US Republican party seemed genuinely surprised at the public outrage of ordinary Americans, desperate for relief when the Reps voted down the $700 bn rescue package. I happen to believe that’s an ill conceived plan, laced as it was with toxic ‘pork barrel’ conditions. That creates the impression of sleaze and self interest at a time when the country wants action and higher standards.
Change is coming in the US. Once a proud nation, it is broken in every sense. Its economy is in tatters, its banks are on the brink of collapse, it people are demoralized, it has an unenviable reputation as the world’s self appointed policeman. It is sad to hear my US colleagues and friends talk of humiliation but that’s what it’s come to for many decent people who want to do the right thing. Some will smile and say they had it coming. That might be true for the elites and those who have prospered to the cost of the man in the street. As one friend said: “Wall Street went out and got drunk. We paid the drinks tab.”
None of that matters. What matters now is for the incoming President – whom most think will be Obama – to draw a line in the sand and deal once and for all with a crooked and utterly discredited banking and business system that depends on sleaze to get its way.
The Big Four have a great deal to answer for and their time will come. We as a profession should stop navel gazing and start doing what at least some of us were taught. Serve clients in their interests.
In the meantime I encourage anyone reading this to pay close attention to events in the US. They have global impact. For a superb and detailed analysis of the campaign, this article in the New Yorker is highly recommended.
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