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Globe Trot
Stiff punishment from the SEC
AFTER the US Securities and Exchange Commission (SEC) banned Ernst & Young from taking on new audit for six months as a punishment for allowing a "blatant" conflict of interest to arise with its former audit client, PeopleSoft, the firm put up a press note on its Web site. "While we are surprised and disappointed by the harsh sanctions in the US, we accept them," it read. "The foundation of our profession depends on our independence and the objectivity of our auditors and advisors. We are committed to delivering quality in everything we do and this requires that our people never compromise their independence or objectivity, in perception or reality." Quite saddening.
Shell shock
A BAD week again for accounting because of what happened in Royal Dutch/ Shell. The company decided to "recategorise" 4.35bn 4.35 billion barrels of oil equivalent (BOE) of reserves at the end of 2002, a reduction of more than 22 per cent on the reserves originally reported. Its audit committee found out about the overstatement, and the finance chief Ms Judith Boynton got ousted. Reports speak of how the reserves problem was hidden from investors for years till the perpetrators feared "game was up". Sickening slick that threatens to spread.
Problem CA
IN CA, that is, Computer Associates, an IT company in the US, the "long-running accounting scandal spreads", notes Accountancy. "The scandal emerged after an internal inquiry found that the company was reporting revenue prematurely. Though the revenues were valid, they were booked in the quarter before they should have been, allowing the company to hit financial analysts' expectations." More are getting sacked, in what the chairman Sanjay Kumar describes as "remedial actions". So, when you say CA, please clarify.
Bye-bye parent
TO severe its umbilical cords, Cap Gemini has dropped its E&Y name, and is simply Capgemini. Also, it has launched a euro 60m rebranding campaign, on the TV and in print advertising. It was about four years ago that Cap Gemini bought E&Y's consulting arm for $11bn. It is based in Paris and provides consulting, technology and outsourcing services, employing about 55,000 people globally. Last year's global revenues were euro 5.75bn. AccountingWEB reports that the ad campaign would feature Andre Agassi's coach and David Bowie's sound engineer as spokesmen. Rebranding was delayed last year "in the wake of anti-France sentiments in the US when the French government refused to join the US-led coalition in the Iraqi war." Strangely, just when "the company believes the coast is clear now to introduce the new brand," there could be anti-E&Y sentiment in the wake of the recent SEC ruling.
Punish the sinners
ALAN Greenspan does not mince words. One of his recent sound-bytes is that Wall Street sinners should be "expeditiously punished". Else they would erode the foundations of trust on which US financial markets are built. As the New York State Society of Certified Public Accountants' site reports that the Fed chief warned: "In rewriting rules and practices that are no longer effective to address the recent run of Wall Street scandals, rule-makers must be careful not to inflict `collateral' damage." Sounds like a different war on terror.
Money in a leaky bucket
A RECENT report from Aberdeen is about trade promotions and is titled, "Pouring Money into a Leaky Bucket". Trade promotion is one of retailers' and manufacturers' most significant ties, even as it stands out as one of their most divisive issues, states Aberdeen. "Both manufacturers and retailers are unhappy with their own and collaborative efforts." Reason: Lack of "big picture" thinking by both sides. Only a dismal 4 per cent of manufacturers and retailers believe that they have `best-in-class' performance. So, there is "ample room for improvement in the strategies, processes, and supporting IT solutions that these enterprises employ to help manage the many promotions a company executes yearly."
Way out of jargon jungle
AT last, it has been realised that we have a proliferation of acronyms. To save the outbreak of head scratching currently going on amongst financial managers and planners, here comes the BPM Standards Group, where BPM stands for Business Performance Management.
It draws together vendors, consultants, analysts and IT implementers, and has as its members IBM, SAP, AG, Hyperion, and Meta Group. To start with, it has defined BPM as "a set of integrated, closed-loop management and analytic processes, supported by technology, that address financial as well as operational activities." Something like this may be necessary for our accounting standards too.
Asset management outlook
TOP 10 issues for the asset management industry in 2004, according to Deloitte include new requirements from institutional investors, alternatives to mutual funds, attracting individual investors, maintaining and rebuilding investor trust, and the need for objective advice.
Road to globalisation would become steeper; there would be newer regulatory requirements, and shareholder activism would escalate.
"Counterbalancing the stronger investment outlook, however, the industry is facing mounting allegations of misconduct and increasing scrutiny of its business practices," warns the firm. Take care.
GlobeTrot@thehindu.co.in
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