The Hindu Business Line : ‘Sub-prime blame game hides issues’

Thiruvananthapuram, Jan. 24 The ‘sub-prime’ blame game targeting the rating agencies merely helps push under the carpet the real issue – why this inexplicable drift into yet another financial/accounting crisis. “A few years ago, it was the auditors in the Enron situation. But was it the auditors’ fault the company was acting inappropriately? Here, is it the rating agencies’ fault the access to money was made easy?”

Expressing his angst at the goings-on was Mr Norman Same, Managing Director of the Australia-based knp Solutions Pty Ltd, a multi-discipline business service advisory service provider. He is the Chairman of Jeffreys Henry International (JHI), an international network of accounting and business consulting firms with more than 150 offices worldwide, and is due on a visit to Thiruvananthapuram.

EASY MONEY

Giving his take on the issue, Mr Same said that money has become easy to get. “Why? Were the normal prudent processes which banks and other major financial institutions lived by, by-passed in the efforts to ‘give away’ easy cash? ”

As in the past, when major issues have occurred, instead of seeking to discover what failed that caused the crisis, the blame game has started, with the finger being pointed at the rating agencies. “We have probably not heard the last word on the issue yet. There may well be a flow-on effect and only time will tell if this is the case. The prudent manager is no doubt checking the underlying assets behind his portfolios.”

HINDSIGHT HELPS

Hindsight is always wonderful and it would not surprise one if, on examination, collaboration between CIOs and ratings agencies were to follow to help stakeholders be forewarned about an impending crisis and ride it out. “I have no doubt that the post-mortems will be closely followed by a raft of new legislation ensuring that once again, we never let this happen again. The big question, though, is how we let it happen in the first place,” Mr Same told Business Line.

His work mainly deals with assisting small and medium enterprises plan for the future. knp Solutions is a member of JHI.

“The experience of our members is that failing to plan is the same as planning to fail. One of the essential points I try to pass on to my clients is the need to be flexible enough to move with the changing environment.

“Whilst planning is vital, a business still needs to be able to quickly react or better still be proactive to changes that effect their business, industry or economy,” Mr Same added.

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