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Thursday, Jul 15, 2004

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Accounting becomes accountability

IN A significant move, the US General Accounting Office (GAO) has adopted a new name. It is now the Government Accountability Office. AccountingWeb observes that some were sorry to see the name of the agency, founded in 1921, changed to include a trendy word like "accountability." It cites the Washington Post to add that GAO officials said the name change better reflects the agency's activities, which involve strategic issues and not just accounting and auditing of financial books.

It is anticipated that the name change will help reduce confusion among job applicants and the public. It would, however, be too soon to expect that `advanced accounting' papers for CA exams get rechristened as advanced accountabilities.

Question of GAAP

THE American Institute of CPA's (AICPA), the US counterpart of our ICAI, has launched a Web-based survey on GAAP statements. According to AccountingWeb, the Institute will poll the stakeholders of private company financial reporting, that is, bank lenders, investor and venture capital/buyout firms, surety, bonding and insurance firms, business owners and managers, auditors, and more, "to determine if general purpose financial statements prepared for private companies' stakeholders are meeting their needs."

A related question is "whether or not the cost of providing all that is required in private company GAAP financial statements is justified, as it may be for publicly traded companies."

The need has been felt for such a survey because small and young companies are creating two-thirds of the net new jobs in the US, and employing half of all private sector workers. Perhaps, something similar is brewing here too with a relook at Schedule VI disclosure norms.

Super growth, superwomen

THERE is some great news from Grant Thornton's International Business Owners Survey (IBOS) 2004: US, India, the UK and Ireland take top spots after Sweden. As the firm's site ( informs, "Compared with a global average of 15 per cent, 24 per cent of companies in Sweden are `super growth'." For the US, percentage is 22, closely followed by India at 21 and the UK at 20.

"Companies in Japan, Mexico and Turkey are least likely to be `super growth'. Only 2 per cent of companies in these countries were classified as such. Around average performers include Hong Kong, Italy and South Africa (each 12 per cent). Leading EU economies, Germany and France, are below average with only 8 per cent of companies in those countries being `super growth'."

Interestingly, `super growth' companies have more women in senior management, according to Grant Thornton. "Nearly half (46 per cent) of `super growth' companies have two or more women in the senior management team, compared with a third (34 per cent) among companies as a whole." Super news.

`Pay-to-play' politics

THE site of the New York State Society of Certified Public Accountants has reported how the Securities and Exchange Commission is taking a closer look at "pay-to-play" politics in the Mid-Atlantic region. It cites the Associated Press to tell us a story that has all the trappings of something we are so used to: About how companies vying for contracts to provide financial services to the city made campaign contributions or lavished gifts on politically connected people in an attempt to win favour with the government officials.

"One firm donated tickets that sent the city's treasurer to the 2003 Super Bowl. Another bought a $1,750 pass that sent him to a week of events at the 2002 NBA All-Star Game. Others donated tens of thousands of dollars to Mayor John Street's re-election campaign or hired one of his top fund-raisers as a consultant." User charges, aren't they?

Be pro anti-fraud

A NEW study from PricewaterhouseCoopers reminds companies to implement "antifraud programmes and controls". Many companies have already implemented components of an antifraud programme (such as codes of ethics and conduct); yet, as PwC points out, "they may need to enhance their programmes to meet the requirements of the new law and to avoid an auditor's finding of a `significant deficiency' or `material weakness' in internal controls."

Strangely, the US Congress, SEC and PCAOB have not yet delineated what constitutes an effective anti-fraud programme and controls.

To help, PwC has identified "the key elements of an effective anti-fraud programme based on the core principles shared by the new law, regulations and standards: prevention and timely detection of fraud." Worth a read even if you're not hit by SOX.

Raise the performance bar

A RECENT research report from KPMG's Investment Management practice presents the views of the investment management industry's senior executives on the change agenda. As the firm's site announces, the report summarises "the views of CEOs, CIOs and Senior Directors from over 300 investment management firms in 29 different countries"; the 2004 report aims to identify: "the nature and scope of the strategic issues and changes, the extent to which they are re-shaping the contours of the industry, and their impact so far on profitability."

Thrust to trust

DELOITTE has launched a series of communications entitled "Global Perspectives: Sustaining Public Trust." The first publication is "Integrity & Quality: The Foundation of Our Culture". This outlines the measures the firm has taken to incorporate integrity and quality in what's done around the world. Trust is not old-fashioned.

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