How strange that it was only in Zimboda (and probably in Nigeria) that all the banks are being audited by only four firms; and the same auditors audit the Regulators!
According to a recently issued report by the Institute of Chartered Accountants in England and Wales, Financial Faculty, “A lack of transparency on decisions damaged public confidence” The document, “Enhancing the Dialogue Between Bank Auditors and Audit Committees”, says there should be more public access to details of accounting judgments challenged by the audit committee and that key decisions should be published in banks’ annual reports. Its recommendations include, among others:
•Considering the extent to which the objectives of the auditor, audit committee and management are aligned for annual reporting activities;
•Balancing the level of co-operation and challenge accordingly;
•Making any challenge and debate that have taken place more transparent, by including details in the annual report on key accounting judgements challenged by the audit committee, and debates between the auditor and audit committee, as well as auditor and executive management;
The British Labour Party Leader, Ed Milliband, was on Bloomberg some nights ago where he called for “a new code of conduct for bankers. Anyone who breaks the rules should be struck off.” Within a matter of hours, the Treasury issued the following statement as “Breaking News” on Al Jazeera:
“Her Majesty’s government considers that recklessness would be the appropriate basis for a new criminal offence for misconduct in bank management.”
Mark Hoban, Financial Secretary to the Treasury was emphatic in his declaration:
“The government is committed to tackling the legacies of the financial crisis and implementing most far-reaching reforms of British banking in our modern history.
Because of the serious consequences that a bank failure can have on the economy and tax-payers, we are also consulting on whether to extend the criminal law to cover serious misconduct in bank management.
We acknowledge that it will be difficult to draw up a definition of recklessness that gives business sufficient freedom to take risks and make legitimate mistakes.
However, creating a new criminal offence involving recklessness would send a clear signal that society – which might have to pay a heavy price for dealing with the consequences of recklessness – is determined to prevent and deter that conduct.
At the very least, it would surely make bank directors think twice before taking certain decisions.
Of course, the Treasury is aware that bank executives may already face sanctions from regulators for negligence or incompetence, for example by refusing to approve them to hold a senior position. Regardless, we recommend that it is necessary to go much further to stop the rot, because of the egregious character of reckless banking.”
The Prime Minister, David Cameron, also issued an official statement on C-SPAN:
“I, along with George Osborne, the Chancellor together with Ed Milliband, the Labour leader and Ed Balls, the shadow chancellor, have agreed to set up a parliamentary commission on banking which will recommend how to improve banking standards and culture, following the scandalous and totally unacceptable revelations of the manipulation of Libor rates by Barclays Bank.”
Specific penalties have not yet been tabled but we are not ruling out jail sentence for recklessness.”
At last week’s joint World Bank / IMF meeting in Tokyo, the theme was “Quis Custodiet Ipsos Custodes” (Who guards the guards?)
The Dalai Lama insisted that each country should name the auditors of all its banks as well as the auditors of the Regulators. How strange that it was only in Zimboda (and probably in Nigeria) that all the banks are being audited by only four firms; and the same auditors audit the Regulators!
To make matters worse, the Dalai Lama alleged that regardless of the prohibition of large audit firms from providing consulting services (following the Enron scandal) and the insistence of the American and British regulators that the largest audit firms should divest from their consulting practices, the audit firms have found a way round it – by selling off their consulting practices while extending their audit practices to cover “Corporate Finance” and “Transaction Services”. Clever !
The Dalai Lama was incandescent. He distributed a long list of certain auditors who in total disregard of conflict of interest provide Consultancy Services to the very same clients they are auditing.
The Dalai Lama then delivered a quotation from Buddha:
“One man wears many caps and soils them all.”
The editorial of The PUNCH newspaper of June 22, 2012, makes an interesting reading. The editorial titled, “ICPC’s curious alarm on corruption”, noted, among other things, that:
“The alarm raised by the Independent Corrupt Practices and Other Related Offences Commission that Nigeria could collapse under the weight of massive corruption is timely and serious. It has come at a time when Nigerians are beginning to wonder if corruption had ever been so pervasive, so blatant and so potentially destructive in the history of this country.
In countries where threats to national survival attract maximum attention, the ICPC warning would have galvanised both the citizens and government into action. There is no doubt that corruption in Nigeria has reached that level. But even when ICPC’s warning is supposed to shock the people out of their lethargy, nobody should expect any serious response because nothing shocks Nigerians any more; not when it is a mere re-echo of what is already well known to everybody… Nigeria must show seriousness in prosecuting the anti-corruption war.”
Bashorun JK Randle is Chairman and Chief Executive, JK Randle Professional Services Chartered Accountants, Park View, Ikoyi, Lagos.
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.