Right at the close of the Ernst & Young report on country-by-country reporting they disclose some very telling detail. They say this:
This is their only reference to Tax Justice Network, but that'snot the point here. The real issue is that this is where another Ernst & Young paranoia is revealed. What is clear is that they now believe that people like Christian Aid and the Tax Justice Network are believed more readily when it comes to tax than Ernst & Young are.
What is more they realise that very soon country-by-country reporting is going to need auditing, and people may not believe Ernst & Young or their credibility when it comes to assessing the truth and fairness of the resulting reports.
APart from the fact that Ernst & Young in the process also reveal that there is very real corporate benefit to country-by-country reporting (something I have long argued) there is also in here a desperate bid to retain part of their audit market that they see might slip away from them.
I have described the Ernst & Young report as 'sorry'. It is. This is a report from an organisation that sees intellectual credibility, popular support, public opinion and economic opportunity all slipping away from them on this issue. No wonder they're worried.
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I don’t read it like that at all. I read it as saying that when people see that Christian Aid, a group with a good reputation as being moral people, say they have concerns over the morality of a company’s tax position, then people might think that CA have undertaken a rigorous revies of the position and are in posession of all the facts. EY are then implying, and rightly so in my view, that this may be a misapprehension: a review by CA may well not be all that reliable. So firms should get a solid audit done by someone who is able to do it properly – EY, for instance.
I think they are right that Christian Aid will be believed by some people more readily than EY would be. But I think this is inherent in the way that CA are tellign people that what they want to believe is true, and EY aren’t. This effect would be there regardless of the true facts of the case: a multinational company could be scrupulously clean, but if you said it was avoiding tax many people would believe you just on general principles.
Then I think you’re wrong
Fair enough 🙂
@Pellinor :
you do not argument why companies like EY would deliver a more solid audit than if delivered by more transparent organizations like CA.
Please read my comment here: http://conscience-sociale.blogspot.com/2013/05/what-should-organisation-do-that-sees.html
EY are embracing transparency with the rapaciousness of a Reticulated Python…
http://www.accountancyage.com/aa/news/2266670/greater-tax-transparency-may-not-be-panacea-warns-e-y