I cannot argue that the inter company transfers should not have been investigated but they were to the exclusion of everything else. Multi nationals use a variety of means to ensure that profits in high tax countries are not too large and base themselves in low tax countries where they arrange to make maximum profit. However while we may not like this happening when it reduces our tax collection, the companies have to maximise profit for the benefit of shareholders not governments. One could argue that the multinationals are now to large but that would be a different thread. Moving the cash around does allow lots of obsfucation as we have seen with many companies that went bust, poor auditing?
Companies already hold asset registers and it is relatively easy to revalue them but the real creative accounting takes place in the area of intangible assets and R&D where one could argue that the valuations and depreciation times may not be in the best interests of the shareholders but of the directors who are going to get bonuses usually based on short term results. These valuations have to be based on opinion rather than fact and are therefore open to abuse. The skill is to change the circumstances before it becomes obvious that the original valuation was wrong. Why else do Governments change the method of calculating statistics nearly every year - so they can say the figures are not comparable with last year.
I agree with the views about auditors becoming responsible to the shareholders and not the directors. All too often we see public companies apparently run for the benefit of the directors, non exec directors and senior managers rather than the shareholders. Much the same as the senior management in many public sector organisations. Golden hellos, golden goodbyes, reward for failure and excessive pay increases rewarding poor performance. I should not get onto casino bankers where they seem to get bonuses no matter how poorly they perform. Perhaps now that fund managers are being encouraged to take an active part in companies they invest in it may not be left to the revolting small shareholders, that can be read both ways depending on your views.
What is the alternative? More regulation, more rules, more quangos? I do not have the answer as I have always found it is very easy to make things complicated and very very difficult to make them simple. Then we have the “its my right” people of all generations and classes who believe they have the right to do what suits them irrespective of the damage to everyone else who will ignore any rules that may restrict their “rights”.
Jeremy,
What make you think that us up north want London’s rejects? :-)
A lot of the houses being knocked down in northern towns were perfectly serviceable and could have been refurbished at relatively low cost but John Prescot wanted them knocked down, for reasons I have never been able to determine, irrespective of local opposition. In many cases they have been left derelict or demolished without replacement. I gave up trying to work out why the last government did anything, it all appeared so irrational. The current one is shaping up as a worthy successor.