Those who were at the Global Tax Transparency Summit yesterday heard me speak early in the day on the almost inevitable subject of country-by-country reporting.
This issue was addressed in the first session of the day. Pascal Saint-Amans said it is working for tax behind closed doors as far as the OECD is concerned and suggested NGOs should be pleased: the OECD country-by-country reporting template is not far removed from what I first suggested. German MEP Fabio De Masi was clear that this had to be public data and was equally clear in the logic of his case.
Then Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (the largest UK based accounting body) offered a typical woolly accounting professional explanation for why transparency may not be such a good idea after all. Chas in this way typifies his profession. If given the chance to deny the user of accounts information they might need he takes it, however he might disguise that fact.
This was enough excuse for me to highlight the obvious paradox of the day. The Global Tax Transparency Summit took place with the support of parliamentarians from around thirty countries. It was sponsored by these organisations:
And not a single accounting professional took to the podium during the day to explain the role of the accounting profession on this issue. The ACCA and ICAEW were in the audience, the latter being silent, as ever. But the IFRS Foundation, Financial Reporting Council and other regulators with responsibility for ensuring that financial statements deliver relevant, reliable, consistent, comparable and comprehensible information to their users were notable by their absence. And I chose to point this out.
I was told by at least two journalists that the steam could be seen to be rising during my intervention and I am unapologetic for that. I am profoundly ashamed of the fact that my own profession refuses to engage on this issue. I think it negligent on their part that they will not discuss the most important accounting issue of our day. I am furious that they simply claim that country-by-country reporting is just tax data and not accounting information at all, as one very senior Big Four firm accountant told me during the day, when this is utter nonsense: since when was data on turnover, profits, accounting provisions for tax, investment and employment tax data? This is just an excuse to justify opacity.
The fact is that all the bodies to which I refer are supposedly run in the public interest. And what this issue makes clear is that they are not being run in that way: they are being run in the interests of tax avoiders and tax havens. I think consideration has to be given to sanction for that failure.
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Sadly markets rule the World today, while regulators and governments are told to stay out of the way of businesses. We might as well ask how the auditors at Tesco could possibly have missed over-statement of profits on the scale that has resulted in prosecutions of some of their directors?
Reality says “he who pays the piper calls the tune”. As long as companies both select and pay for their own “independent” auditors, the pressure to collude with them will be overwhelming (including not rocking the boat by speaking out in favour of tax transparency).
A more independent system of selecting and paying for auditing services might help, but it is hard to see how this could operate. Perhaps if firms paid a levy to HMRC, who were then made responsible for selecting auditors for each company, we would achieve greater independence? But could this introduce other conflicts of interest? Any alternative ideas?
Business is short sightness affect them in the fact that we the people don’t have the citizen’s income. so less money for people to spend in the shops ect….
Along with all the government services that they need and access.
Also only through customers giving tax at point of sale which they collect for the government one wonders why they are allowed to take the money off the people in the first place.
well said to both
Richard, as fellow member of ICAEW, I too am appalled with their silence, and indifference, which seems to me the exact opposite of it’s self-description as “thought leaders”. Camp followers seems more appropriate.
I am also furious that, by definition, their position, taken without any consultation of which I’m aware, tars me with the brush of their indifference in the eyes of those I seek to help professionally.
“Thought leaders” my arse (with apologies to any who may be offended by my bluntness).
I have a lot of sympathy with that
Thanks Nick
It isn’t just accountants. The property business in London is riddled with crooked professionals involved in money laundering and leasehold monetisation scams. See http://www.leaseholdknowledge.com e.g.
To be fair I think your side is gradually winning the day
— despite the ” Spanish practices” of the Big Four and their progeny.
Why don’t you name the big 4 representative who said that?
Amen to your sentiments in this piece.
In a such a complex situation, the accountancy and taxation specialist professions have to be “On side” and they are clearly not.
You say ” I think consideration has to be given to sanction for that failure”
Can you flesh that out with examples of what sort of sanctions, and an assessment of the degree of success they might achieve?
Best wishes in your admirable crusade for clarity and fairness in reporting standards.
You will never be out of a job, sadly.
I fear you are right
Oxfam’s accounts are audited by PricewaterhouseCoopers LLP
Save the Children’s accounts are audited by KPMG LLP
Action Aid by Sayer Vincent LLP
Christian Aid by Crowe Clark Whitehill LLP
Cafod by Crowe Clark Whitehill LLP
Good to see some of these majorly government funded Non-Governmental Organisations have noticed that non Big Four auditors are available.
Intereesting…
Over my short time here on this blog I have given numerous examples of negative attitudes to tax amongst ordinary people – from couples who have never declared their divorces for tax reasons to middle class women who put their husband’s income straight into the bank because hubby works cash in hand, to contractors who are always willing to accept payment for services off the books to avoid VAT.
There is an epidemic of tax evasion in the country – made worse by austerity in my view – and the accounting ‘profession’ knows it.
Until those attitudes change, occurrences as you describe above Richard will continue.
I often think that professions like the Law, Finance and accounting can act like ‘moral mirrors’ to society – reflecting back to them their attitudes and some of those reflections are not pretty.
A bit of history: I have been driving through Luxembourg (from Belgium en route to France) since the late 1980s, in the 1980s and 1990s, generally speaking @ 0800hrs on any morning one could rocket through – not much traffic (bit heading towards the EU institutions but not much). The steel works had shifts that did not fit with an 0800hrs pass through. By the mid-2000s things started to change – as of now – do not try and go through Luxy @ 0800hrs in the morning – because all the people working in the Luxy tax dodging industry are heading to work lots of them are acountants & make good money from their activities. The person responsible for all this (who answered the question as Luxy PM & finace minister – in the mid to late 1990s “what do we do in terms of economic development” as the Luxy steel industry started to close down) is a certain Mr Juncker – now head of the European Commission.
The tax dodging industry is a significant employer (see above) – & I suggest that is one reason why the profession says nothing.