2012 legacy depends on ring of financial rigour

Legacy… it’s a word bandied about with great gusto on today’s front page.
The legacy of the Olympic Games, which was key to London’s successful bid for
2012, is questioned due to financial management concerns at the body looking
after much of that legacy – the London Development Agency.

However, legacy is a very apt word to sum up the financial management
problems that have beset the organisation. After a number of critical reports
about the standard of the LDA’s accounting over a period of years, it is still
beset by problems.

It’s unclear yet whether new director of finance, public sector veteran Ian
Grattidge, has been surprised by the level of the task at hand. But minutes
after his introduction to the committee members, he referred to a lack of
technical accounting skills within the finance function and the need for
financial management to be embedded across the whole of the organisation.

And still there are more questions than answers. Can Grattidge push his team
to file the 2010 accounts on time?

Will he be given the resources to bring the right people into the function?
Will they come in with enough time to bring about quick change? Will the LDA as
a whole accept greater financial rigour?

With 2012 looming, we won’t have to wait long to find out. Let’s hope finance
can lead the field for the last few laps of its Olympic legacy project.

Make good governance worth the cost

Last week’s release of a landmark audit governance code took few in the
industry by surprise. Since Enron, the wind of change has been steadily blowing
towards greater transparency, more governance, more regulation, more disclosure.

This week’s release may not be the end of this process, but it is surely one
of the most definitive statements yet by the industry to show its willingness to
embrace good governance principles.

However, good governance has a cost, which could disproportionately affect
some of the smaller players in the field. It’s a difficult balancing act – on
the one hand there’s cost, on the other, good governance.

Drafters of the new code say they have been mindful of this, and so they
should be. The last thing anyone wants to see is a firm throw in the towel and
stop auditing listed companies because of what they see to be onerous
restrictions.