max autobrakes
20th Sep 2007, 10:36
I wonder what they would find if someone did a spot of forensic accounting through the Qantas Group's books?
FROM THE AUSTRALIAN:
Geoffrey Newman | September 20, 2007
THE panel charged with adjudicating disputes between companies and the corporate regulator over financial reporting standards is yet to hear a single case - more than a year since its inception.
The Financial Reporting Panel began operation in May last year as part of the federal Government's CLERP 9 reforms to corporate regulation, a response to recent financial scandals, including the collapse of HIH in 2001 and Enron in the US, both of which were aided by fraudulent accounting.
Since then, the eight-member panel has not heard one case, despite Australia's adoption two years ago of new International Financial Reporting Standards, which toughened the rules on how companies must present their results and value assets on their balance sheets.
Panel chairman and KPMG partner Paul Shannon said the absence of cases was not a cause for concern and, in fact, showed that the new standards were working well.
He said the British panel on which the Australian body was modelled did not hear its first case for three years.
The Australian panel did get close to hearing one case, but the company withdrew its objections, after the regulator, the Australian Securities and Investments Commission, said it was going to refer the case.
Mr Shannon said the workload of the panel was likely to increase once the economic boom passed and companies tried to push the rules to their limits in order to maximise reported earnings.
While conditions were strong, there was less of an incentive to explore the boundaries. "Business is booming and people are not running close to the wind," Mr Shannon said.
Also, many companies outside the top 50 listed firms had responded to the complexity of the new rules by handing the detailed compliance work to the big four professional services firms: Ernst & Young, Deloitte, PricewaterhouseCoopers and KPMG.
"The technocrats took charge of the transition and everybody followed it," Mr Shannon said.
When people became more comfortable with the new regime, "there might be a bit more push and shove around the grey areas", he said.
The panel is an attempt to avoid costly litigation, which was previously the only avenue open to a company to challenge ASIC in a dispute over its accounts.
The panel can only hear cases if it receives a referral from ASIC or the company involved and its decisions are non-binding, although it has the power to subpoena witnesses and documents. Perhaps crucially, it also has the power to bar lawyers from proceedings.
It expects to eventually hear about 12 to 20 cases a year, Mr Shannon said.
He said the most likely pressure point that would lead to referrals to the panel would be a company's treatment of impaired assets in its accounts.
Experts have warned this is likely to affect the banking sector most, because banks will no longer be free to smooth losses from bad loans over the economic cycle, potentially introducing more volatility to earnings.
Outgoing ANZ boss John McFarlane this week warned that IFRS was bad for the banks.
FROM THE AUSTRALIAN:
Geoffrey Newman | September 20, 2007
THE panel charged with adjudicating disputes between companies and the corporate regulator over financial reporting standards is yet to hear a single case - more than a year since its inception.
The Financial Reporting Panel began operation in May last year as part of the federal Government's CLERP 9 reforms to corporate regulation, a response to recent financial scandals, including the collapse of HIH in 2001 and Enron in the US, both of which were aided by fraudulent accounting.
Since then, the eight-member panel has not heard one case, despite Australia's adoption two years ago of new International Financial Reporting Standards, which toughened the rules on how companies must present their results and value assets on their balance sheets.
Panel chairman and KPMG partner Paul Shannon said the absence of cases was not a cause for concern and, in fact, showed that the new standards were working well.
He said the British panel on which the Australian body was modelled did not hear its first case for three years.
The Australian panel did get close to hearing one case, but the company withdrew its objections, after the regulator, the Australian Securities and Investments Commission, said it was going to refer the case.
Mr Shannon said the workload of the panel was likely to increase once the economic boom passed and companies tried to push the rules to their limits in order to maximise reported earnings.
While conditions were strong, there was less of an incentive to explore the boundaries. "Business is booming and people are not running close to the wind," Mr Shannon said.
Also, many companies outside the top 50 listed firms had responded to the complexity of the new rules by handing the detailed compliance work to the big four professional services firms: Ernst & Young, Deloitte, PricewaterhouseCoopers and KPMG.
"The technocrats took charge of the transition and everybody followed it," Mr Shannon said.
When people became more comfortable with the new regime, "there might be a bit more push and shove around the grey areas", he said.
The panel is an attempt to avoid costly litigation, which was previously the only avenue open to a company to challenge ASIC in a dispute over its accounts.
The panel can only hear cases if it receives a referral from ASIC or the company involved and its decisions are non-binding, although it has the power to subpoena witnesses and documents. Perhaps crucially, it also has the power to bar lawyers from proceedings.
It expects to eventually hear about 12 to 20 cases a year, Mr Shannon said.
He said the most likely pressure point that would lead to referrals to the panel would be a company's treatment of impaired assets in its accounts.
Experts have warned this is likely to affect the banking sector most, because banks will no longer be free to smooth losses from bad loans over the economic cycle, potentially introducing more volatility to earnings.
Outgoing ANZ boss John McFarlane this week warned that IFRS was bad for the banks.