Appease the critical MPs
The self-righteous indignation displayed in your ‘Letters’ pages only confirms what many people already know. Accountants are in disrepute because they won’t take a critical look at themselves.
Your correspondent Dominic Mathon (‘Letters’, 25 February, page 23) attacks Jim Cousins and Austin Mitchell for claiming that audit trainees routinely falsify work. The claim is absolutely true and known to audit partners in most major firms. I came across research to that effect during my undergraduate studies in the late 1980s. The profession has done nothing about it. Mr Mathon might wish to read a recent paper in Volume 28, number 2 of British Accounting Review by Christine Willett and Michael Page (not a lefty chartered accountant) which entirely vindicates the views of Mr Mitchell and Mr Cousins.
While not a Labour supporter, I must admit the two MPs are extraordinarily well informed about all current issues. Let us have more provocative and stimulating articles please, rather than the rantings of the ‘all is well’ brigade.
Leo Bates, Brighton, Sussex
Working in the industry
I notice Jim Cousins MP, in his article of 18 February (page 15) refers to ‘the British accountancy industry’.
I had always understood accountancy was a profession, but perhaps his description is more appropriate in the present condition of the profession/industry.
Tom Eastwood FCA, Huddersfield
Those in glass houses …
Reading Austin Mitchell’s contribution (25 February, page 23), I wonder whether he accidentally substituted ‘accountancy bodies’ for the government and cabinet?
To quote: ‘Accountancy bodies and their hand-picked cronies filter the evidence and act as judges and jury to protect their own’.
Mike Harvey, Romford, Essex
Charge of the euro brigade
Apart from being astounded at the willingness of the Inland Revenue to accept tax payments in euros – which is a foreign currency no different to dollars, yen or lira, given the continuing slide of the euro on the foreign exchanges – I presume the taxpayer is picking up the tab for the loss on exchange and the transaction charges which are undoubtedly being incurred.
Brian Worboys, Broomfield, Essex
Mr Babbage, I presume
With due respect to Mr Stokdyk (‘The multimillion US gamble’, 28 January, page 16) – he is ill-informed about the Totnes inventor, Mr Charles Babbage.
Unfortunately, Mr Babbage’s achievements have gone largely unrecognised.
He was, however, born in 1791 and died in about 1870. His ‘analytical engine’ dates back to at least 50 years before Mr Stokdyk’s ‘100 years’.
Totnes museum has a room devoted to his work and inventions, which – apart from the electronics – was as near to the principle of the modern computer as anyone else achieved until the 20th century.
T Donald Teague,Cowes, Isle of Wight
Young heads, old shoulders
As a chartered accountant in the twilight years of my professional career, I am not surprised about the recent press reports on the Maxwell failure.
Let me give you a synopsis of the thoughts of a non-academic accountant – but one fairly street-wise.
Firstly, it is possible to qualify as a chartered accountant in three years, but I venture to suggest you cannot train an auditor in that time. All too often, audits are manned by inky-fingered college kids with a recently acquired university degree.
For too many years, accountancy has been the dumping ground for the unemployable graduate. All the large firms of accountants are guilty of recruiting trainees with off-beat degrees like macro-molecular chemistry, genetics, zoology and a host of other ‘ologies’. They only ventured into accountancy because there was no chance of a promising career in their chosen field. All too often, audits are under-staffed by novices who neither know nor care what the company manufactures or services. To them, the financial press appears almost a foreign journal.
Where do we go from here? Perhaps audit committees should also enquire into the quality and experience of staff employed on the audit, rather than listen to the auditor’s swansong on the usual well-hackneyed concerns.
Perhaps also we should realise the large international firms of accountants are overrated and certainly over-rewarded.
The last Maxwell Group audit report, unqualified as always, was dated 4 July 1991. Maxwell died November 1991. Does that say it all?
Jonathon Chaytor, Great Altcar, Liverpool
It’s audit but not as we know it
I read the letter from Peter Swaby (14 January, page 15) with incredulity.
What colour are the clouds on the planet that you are inhabiting, Mr Swaby?
The principle of ‘independent’ auditing has been tried and tested throughout the UK and surprise, surprise, it works.
In 1996, the Department of the Environment changed the legislation so the responsibility for maintaining an adequate and effective system of internal audit now rests with ‘the relevant body’ rather than ‘the responsible finance officer’. In other words, the elected council of every local authority in England and Wales is responsible for internal audit. Administration and audit must be separate.
In practice, however, heads of finance have recommended to their councillors that the status quo, i.e. their direct control of internal auditing, should continue. The mystery is why our elected councillors have not established independent audit committees. Or rather, on reflection, the mystery is why we keep voting for candidates that are so ill-informed that they do not understand their responsibility to maintain an adequate and effective system of internal control.
Perhaps you might consider asking the next local council candidate who knocks on your door this question: ‘Do you believe the council’s internal auditors should report through the salaried official whose activities they are investigating, or through an independent audit committee?’
Sam Hearn,Chiswick, London, W4
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