More Fraud in the EU

Remember this time last year? When the EU court of auditors refused to sign off on the EU accounts? How much you want to bet that they will refuse to sign off again this year? Not much, right?

So let me see if I understand this, for the 14th year running, there is fraud and incompetence running riot in the EU. Almost every area of its running is open to incompetence, fraud, stupidity and frankly corruption.

And then Anonymous had the teremity to argue with me to tell me that I am wrong? Listen, my dear chap, I am currently executing the world's largest financial transformation programme and am knee deep in auditors, accountants and the like. So dont tell me that its technical reasons, you pillock.

Here, read what another person says on this disgusting state of affairs. I quote:

 

Here we go again. Today, for the 14th year in a row, the European Court of Auditors will unveil their report, telling us that they refuse to clear the EU accounts. What's worse, no one will really seem to care. We are told that the accounts won't be cleared until 2020 - if then.

Having worked inside the Brussels nomenklatura and having being sacked for my insistence that financial controls have to be strengthened, I am not surprised to find that nothing has changed other than the arguments deployed to defend this state of affairs. What the auditors have been saying for years is that most of the payments made by the Commission from its £70 billion-a- year budget cannot be deemed legal or regular. That is, that they cannot confirm those payments have been made to the correct person for the correct purpose and for the correct amount. It stretches credulity to insist, as the Europhiles do, that this does not mean that there is fraud.

Because the payments are made to beneficiaries in the member countries it's easy enough for the institutions to put the blame on those recipients. Which is what they do, claiming that the problem is one of insufficient attention being paid to the paperwork. But who designed the paperwork that no one understands or completes? And who doesn't insist on it being completed? The institutions themselves, of course. Because this control is missing there is no way to protect against fraud or even to uncover it.

UK Treasury in a mess

This would be amusing if it was not so sad and worrying. The treasury is actually the nation's treasury, it takes my tax dollars in and then gives it to deserving folks like the sick, ill, and deprived. If i do not pay my taxes, then the government can come and lock me up and take my pots and pans.

But this very same government cannot account for the money it has taken from me. Its accounting is in a shambles. Why? because the auditors are refusing to sign off on it. The economic incompetence of this government is staggering. In any case, I as a taxpayer have suddenly become the owner of a bank and I am now lending money to others for mortgages. And this decision was taken by Alistair Darling and that prime moron, Gordon Brown. God, you need to be turfed out ASAP, how much more damage will you do to the country?

Technorati Tags: audit,united kingdom,incompetence,government stupidity

An arcane argument over Mark to Market

Further to my essay on Mark to Market, here's a nice article on an arcane aspect of it. I quote:

“Fair” values for bank assets could be different for accounting and regulatory purposes, the UK regulator has warned, in a move that could see banks forced to top up their capital reserves.
The Financial Services Authority has held “round table” meetings with banks and leading auditors to discuss the issue as part of its scrutiny of valuation techniques in the current market turmoil.
Although the FSA has not changed its rules, officials have warned banks to take extra care over their regulatory valuations.
Both regulators and accounting systems rely on “fair” or market value of assets. Regulators then require banks to adjust the accounting number, if necessary, to more closely reflect actual liquidity. In today’s markets this is most likely to involve booking assets at potentially steep discounts to the current price if that amount is unlikely to be realised when the whole asset is sold.
Accounting standards previously included this notion, known as the blockage factor.
The most common example is discounting some of the total value of a large shareholding since selling the entirety in one go would depress the market, meaning the bank could not realise the full price per share that the holding was worth technically.
“The FSA made the point they are concerned about prudential valuation,” said one person present at the meetings.
“They recognise that in normal markets both values might be the same but when liquidity dries up, they might well diverge. Their focus was around the risk of uncertainty around valuations like asking what would happen if mortgage default rates rose further.” If a bank lowers its valuation reckoning on a particular holding, it could weaken its regulatory capital reserves.
The FSA’s research stemmed from work commissioned by the Basle committee on bank regulation.
At the meetings, regulators also presented their research into banks’ efforts to value securities in illiquid markets.
The general conclusion was that the models being used had improved.
“[The FSA] wasn’t as explicit as saying ‘things are either getting better or worse’, but it is fair to say all banks’ processes are getting better,” said one senior financial services auditor. “Like anyone living through a crisis you’re going to learn something from it.”
As markets seized up and prices became harder to find for many securities, banks have been forced to develop a number of new models to value their holdings in the third quarter of last year and have improved them since, auditors said. The FSA’s report contained nothing that surprised them, they added.
The recent meetings were the second involving auditors from all the biggest firms, who welcomed the FSA’s role in convening the groups.
“We can only look at our own audit clients and they can look at a wider range of firms, which is helpful,” said one attendee. “The fact they’re engaging with us on this is a positive development.”

All this to be taken with a grain of piquant salt!!!

Imprison the EU Commissioners for Fraud

Well, if you were running a public company spending hundreds of billions of Euro's and for thirteen years, your auditors were refusing to sign off on your accounts stating that your accounts were not fit for purpose, full of fraud and corruption, you would be chucked into jail, no? You would not swan around in expensive suits, be photographed in the media shaking hands with the great and good, no?

No, well, here's the European Commission which is full of crooks. Nobody is responsible and this is the organisation that Gordon Brown wants us to sign up to without a referendum?

Crooks and Thives! I quote:

A report by the European Court of Auditors (ECA) criticises nearly every major area of the EU's expenditure.
According to the auditors, the commission has failed to maintain effective supervision of expenditure on major infrastructure projects, the BBC's Jonny Dymond in Brussels says.
In all, nearly 80% of the EU's 106bn-a-year euro budget (£75bn) fails the auditors test.

And I dont care that it is because of complex technical requirements. Public companies manage to do this. And if the EC cant manage its own accounts, then how on earth is it managing the EU? the mind boggles at the sheer stupidity of the excuses that these morons put forth.

All this to be taken with a grain of piquant salt!!!

Will the audit landscape change in the UK?

The Financial Reporting Council (UK's independent regulator responsible for promoting confidence in corporate reporting and governance) has now presented 15 recommendations to remove the concentration risk that only 4 top audit firms cater for 246 of the top 250 firms in the UK. If one of them goes bust, then the entire economy of the country will be dangerously impacted in terms of confidence. We have seen something like this before when Arthur Andersen blew up. That had a major impact.

So the FRC came up with these following recommendations.

1. The FRC should promote wider understanding of the possible effects on audit choice of changes to audit firm ownership rules, subject to there being sufficient safeguards to protect auditor independence and audit quality.
2. Audit firms should disclose the financial results of their work on statutory audits and directly related services on a comparable basis.
3. In developing and implementing policy on auditor liability arrangements, regulators and legislators should seek to promote audit choice, subject to the overriding need to protect audit quality.
4. Regulatory organisations should encourage participation on standard setting bodies and committees by appropriate individuals from different sizes of audit firms.
5. The FRC should continue its efforts to promote understanding of audit quality and the firms and the FRC should promote greater transparency of the capabilities of individual firms.
6. The accounting profession should establish mechanisms to improve access by the incoming auditor to information relevant to the audit held by the outgoing auditor.
7. The FRC should provide independent guidance for audit committees and other market participants on considerations relevant to the use of firms from more than one audit network.
8. The FRC should amend the section of the Smith Guidance dealing with communications with shareholders to include a requirement for the provision of information relevant to the auditor selection decision.
9. When explaining auditor selection decisions, Boards should disclose any contractual obligations to appoint certain types of audit firms.
10. Investor groups, corporate representatives, auditors and the FRC should promote good practices for shareholder engagement on auditor appointments and re-appointments.
11. Authorities with responsibility for ethical standards for auditors should consider whether any rules could have a disproportionately adverse impact on auditor choice when compared to the benefits to auditor objectivity and independence.
12. The FRC should review the Independence section of the Smith Guidance to ensure that it is consistent with the relevant ethical standards for auditors.
13. Regulators should develop protocols for a more consistent response to audit firm issues based on their seriousness.
14. Every firm that audits public interest entities should comply with the provisions of a Combined Code-style best practice corporate governance guide or give a considered explanation.
15. Major public interest entities should consider the need to include the risk of the withdrawal of their auditor from the market in their risk evaluation and planning.

All very fine and good. But when in the name of all that's holy will this happen? Is there space in the legislative diary? It will take 5-6 years for this entire project to finish, so the Government should take its finger out and get moving quickly!

All this to be taken with a grain of piquant salt!!!