The case of Paul van Buitenen, an assistant in the internal auditemains society’s scapegoat for fraud. Now is the time for a change of attitude, says Peter Williams. unit of the European Commission, comes at a time when the Auditing Practices Board in the UK is trying to provoke some debate over society’s attitude to fraud.
Van Buitenen was suspended on Christmas Eve following the discovery that, after months of getting nowhere by observing internal procedures, he had finally leaked allegations about fraud and corruption within the EC to the Green Party. The commission has reacted in the time-honoured manner of any organisation which does not wish to confront the basic issue: it is trying to shoot the messenger.
The fact that there is fraud, corruption and – most of all – mismanagement within the EU is so passe that it hardly ranks as news. Anyone who follows events at the EU will not have raised an eyebrow at the Court of Auditor’s report, published last November, which reckoned that #3bn – around 5% of the EU budget – could not be accounted for. And it was just under a decade ago that former Accountancy Age journalist Nigel Tutt published his book ‘Europe on the Fiddle’, which catalogued the commission’s mismanagement of the 1980s.
Plus ca change c’est le meme, as they probably say in Brussels.
At the same time that the van Buitenen affair is hitting the headlines, the Auditing Practices Board is trying to gather reaction to the document which it published just before Christmas. ‘Fraud and audit: choices for society’ is the latest in a long series of attempts by the accountancy profession to fill in the expectation gap. Over the years, the auditing profession has been politely pointing out to society that it alone cannot be held responsible for preventing and detecting fraud.
This time, the APB has clearly and precisely set out changes that could be made to auditing, corporate governance arrangements and company law to prevent, detect and deter fraud. All, however, have a cost in terms of money and additional burdens on organisations. Despite the suspected level of fraud, many argue that these additional burdens – imposed to address the consequences of the wrongdoing of a few – is undesirable. That is the stance of the leaders of the European Commission.
The real problem with the attitude of the commission – and many other organisations where money is squandered and where fraud takes place, is that fighting fraud is not among the top priorities. The EU does not need to change its internal auditors, it needs to change its attitude to fraud.
The van Buitenen episode demonstrates that the auditing profession is still a handy scapegoat for a society that refuses to take fraud seriously.
Peter Williams, chartered accountant, is editor of the newsletter Electronic Finance
A new head of solutions, Aidan Brennan, has been appointed at KPMG UK
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast