En France ce weekend and the press is full of the euro4.9bn fraud at Societe General. Astonishing that another rogue trader should appear in the form of Jerome Kerviel, SocGen's estwhile trader, especially given that the world thought that this sort of thing was behind us after Nick Leeson's escapades at Barings.

But while financial regulators ponder just how his deteriorating position was never spotted by the checks and balances that should have been watching him like a hawk, the much more arcane but crucial question of how you account for these things has already begun to surface.

In short did SocGen follow established accounting rules by shoving all the losses in the accounts for 2007, or should they have been on the books for 2008, the year in which the losses were made?

This one will have the accounting experts rubbing their heads for months to come, especilly in France where their is a lot of public support for IFRS, but even more private chagrin over the matter.
Still, as we say in the press, this one will run and run.

January 26, 2008 | Permalink | Comments (0) | TrackBack (0)

Forging relationships is important in business. You need to do your networking, commit yourself to the glad handing and meet the suits who might just bring in the next multi million pound contract.

Sometimes though you need someone for  the formalities and make the introductions, someone of stature, someone who commands respect, someone like the prime minister.
And that's exactly what Mark Otty, head of Ernst & Young, John Connolly head of Deloitte and KPMG's chairman John Griffith-Jones of KPMG, have in Gordon Brown on the PM's current trip to China accompanied by a host of other UK business big wigs.
Not only will they benefit from Brown's presence with the Chinese, but they're also locked up with the likes of Arun Sarin of Vodafone, Marcus Agius of Barclays and David Brennan of AstraZeneca. It is, in short, the dream networking opportunity for a provider of professional services.
Of course, it's quite smart taking all these accounting, technology, financial services and energy experts, because its much too late to introduce manufacturers to the Chinese.
But accountants, that's interesting. There's no doubt the Chinese are big on accounting. They're buying into IFRS, growing their own profession at an exponential rate and see reliable accounting, quite rightly, as a route to international financial credibility.
Oddly though, the authorities in China are also very interested in exporting accounting services and have talked publicly in the past about developing home grown firms to compete with the Big Four. Interesting to see how that all works out. And I'd love to be listening in to
Let me take this opportunity to make an observation however. It may be a little unfair, but I'll make it all the same. While on holiday in France in 2004 the TV stations were full of news about a trip by Jacques Chirac to China accompanied by a 747 load of French businessmen. They threw everything at the trip. Chirac himself was lauded as a master of bonding with the Chinese and during the course of a couple of weeks networked relentlessly at function after function on behalf of French business. He was even featured in an hour long interview on national TV about relations with China and France's place in the world.
That was fours years ago and I note this morning references to the fact that exports from, not only France, but Germany and Italy too, all out do sales from the UK. There's a game of catch up to be played here and Gordon is not renowned for his socialising skills. Hope this trip means his game is on the up.

January 18, 2008 | Permalink | Comments (0) | TrackBack (0)

Sir John Harvey-Jones, that trouble shooter and icon of British Business, has passed away aged 88. He was remembered in thousands of words of copy for his work at ICI and heading the first UK business to turnover £1bn. Remarkable performance.

My colleague has written about the Harvey-Jones view of finance directors, but few will remember his very low opinion of accountants. Back in 2003 he had these arresting words in the The Independent for accountants while reflecting on corporate culture in the wake of the Enron scandal.

‘Accountants go to the far end of a fart to make the accounting system measurable. They go to extreme lengths on what is easily measurable, but make no efforts on things that are absolutely crucial to the future of the company – for example, valuing the opinion your customers have of you.’

He added that accountants

‘go to immense trouble to measure what you could earn, but they never make one-hundredth of the effort to measure what happens if things go horribly wrong. The accountant really has to give a full and fair view of every position. Otherwise he’s failing in his duty.’

Blimey! What on earth was it like being his finance director? Brutal? Terrifying? He would not have suffered fools gladly. What, hopefully, this colourful quote really means is that he didn’t like ‘yes’ men. In any way whatsoever. Don’t spin the figures, just tell it like it is. But I wonder whether his argument about the operational priorities of accountants stands up to scrutiny? Somehow I doubt it. Harvey-Jones was shrewd man and I have no doubt he got what he needed out of accountants and was fully aware of their worth. As long as they worked his way.

January 11, 2008 | Permalink | Comments (0) | TrackBack (0)

Fascinating to see Barack Obama claim victory in the first battle for the US presidential race, coming out tops in the Democrat causcases in Iowa.

Of course it has been noted that Obama should be the candidate for those against dodgey tax arrangements having put his name to the Stop Tax Haven Abuse Act in the US because these nefarious practices apparently drain Washington's coffers of $100bn a year (how you estimate that I have no idea).

It's interesting to note then that Obama is no favourite among employees in accountancy firms. We know that because of the way political donations have to be disclosed in US elections. Not a single accountancy firm figures among the top 20 employers for donors to the Obama campaign, according to the Washignton-based Centre for Responsive Politics.

On the other hand employees of Ernst & Young form the 16th largest contributor to Hilary Clinton's campaign while they form the biggest body of donors to the campaign of Republican candidate Rudolph Giuliani.

Wonder what we make of that?

January 4, 2008 | Permalink | Comments (0) | TrackBack (0)

Here's someone whose New Year has got off to a flying start - Kim Woo-choong, founder of the Korean conglomerate Daewoo.

Convicted and sentenced to ten years behind bars for accounting fraud following Daewoo's collapse under £40bn of debt - Woo-choong has been pardoned by the country's president.

That means he serveda little more than a year for his crime. Even taking into consideration his good behaviour, that something of a result for a man associated with a massive corporate disaster.

Just goes to show that in some place white collar crime remains only marginally more serious than parking on a yellow line.

January 2, 2008 | Permalink | Comments (0) | TrackBack (0)