There was a letter in the FT on Saturday that irritated me. It said:
Sir, We all must face the uncomfortable truth that in this country, the circumstances you are born into still have a decisive influence on the opportunities available to you in life (“Theresa May's Social Mobility Commission walks out”, FT.com, December 3). At the heart of the problem is the stark postcode lottery that exists in Britain today. Just this week, a new report from the Joseph Rowntree Foundation tells us a total of 14m people in the UK currently live in relative poverty. That's more than one in five of the population.
So far so good. It continues:
This is not a new problem. Indeed, many businesses already recognise the importance of taking action on social mobility. But deep rooted economic and societal issues like those we are facing in the UK won't be resolved overnight. And it is clear that the government cannot fix this alone. As employers, we have a crucial role to play in achieving social mobility in this country once and for all. We understand our responsibility, and we are taking concerted action to address this challenge head on. But we know there is much more to be done.
You may be beginning to sense my concern. The authors continue:
There are reasons to be hopeful. Chief among them, the knowledge that social mobility has never been higher up businesses' agenda than it is today. Business leaders now understand that they cannot meet the demands of the modern world without employees from a rich variety of social backgrounds. This is the right thing to do, but it is also vital if the UK is to remain competitive on the global stage.
Their concerns tick all the boxes: social mobility; inequality; and diversity are there even if they spoil it somewhat by suggesting a competitive constraint. So what more might they say? This (after I've deleted some padding):
We must capitalise on this positive momentum and ensure that in 20 years, we are not still operating in a landscape of inequality, having these same difficult conversations. Now is the time to create a fairer society, where it is an individual's talent, drive and ambition that defines their future, not where they started out. It will take the best efforts of all of us – working together – to ensure future generations of young people have the skills, opportunity and support they deserve.
Who could argue? Well, I can. Because the signatories are:
Melanie Richards Deputy Chair, KPMG
Keith Skeoch and Martin Gilbert Co-Chief Executives, Standard Life Aberdeen
Malcolm Gomersall Diversity and Inclusion Partner, Grant Thornton
Laura Hinton Chief People Officer, PwC
Tim Smith Partner and Co-head of Social Mobility & Ethnicity Group, Berwin Leighton Paisner
Emma Codd Managing Partner for Talent, Deloitte UK
Mandy Love Social Mobility Lead Partner, EY
To put it another way, that's the Big Four accountants, plus friends.
But to be blunt, the Big Four are a massive obstacle to progress. I'd draw attention to my research on them, done with Saila Stausholm. What we found was that the Big Four:
- Do not publish accounts that let us hold them to account either nationally (in most cases) or internationally;
- Do not account for the tax that they pay in many locations;
- Do operate in all the world's major tax havens, whose sole purpose is to undermine the tax system of democratic countries, increase inequality, and deny the resources required to ensure that redistribution of income and wealth takes place both within and between states;
- Do not admit to the number of staff of employing many of the places where they are located;
- Do not supply any of the reasonable, additional, employment data that might be expected of firms of their size, including gender analysis;
- Do sell tax services that many might describe as tax avoidance.
I am, of course, delighted with these firms wish to tackle inequality. Anyone who wants to do that pleases me. But if they are serious in their intent the letters of this sort have to stop and action has to begin. In my opinion those actions include commitments to:
- Full accountability both nationally and internationally and without exception in every location where these firms trade, and the publication of full country-by-country reporting accounts including information on tax paid, whether by the firm or by its partners in aggregate in a place;
- Disclosing full information on the number of employees that each of these firms has in each location in which it trades, including information on gender balance and the gender pay gap;
- Withdraw from all activities in tax havens that might b, in any way, artificially relocate profits to undermine the tax system of another country;
- End association with anything that might look like tax avoidance.
Do this and I will believe their public utterances. Until that happens they are part of the problem and do not come close to being a part of the solution.
I will be happy to publish their reply.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Where have they published their programme for reforming themselves so that we can all judge how well they answer their own critique, lest in 20 years time….?
Oh dear – the usual abuse of empathy to make it look as though you are concerned.
‘Public Relations’ – the nemesis of progressive thinking everywhere.
In response to a previous post I attempted to highlight some common, run-of-the-mill hypocrisy expressed by the Irish Times, but what you have highlighted here stinks to high heaven. This effort by the senior representatives of the facilitators of the exercise of brute political and economic power to ingratiate themselves with opnion formers, the public and policy-makers is truly nauseating.
Their primary function is to make money by helping those with lots of money make even more money. And they now realise, oh so belatedly, that in order to continue doing so they will need “employees from a wide variety of social backgrounds”. Who ever would have thunk it. Well, bully for them.
But, as you highlight, their efforts to gain enhanced public respectability for doing what should they have always being doing should be matched by equally strong efforts to highlight the ways they faciliate the wealthy and powerful to distort, abuse and avoid the implementation of public policy.
Until we see some concrete action it’s all just …
http://1.bp.blogspot.com/-pJ7grM3g_wQ/Tea9P7whSsI/AAAAAAAAIhA/xIEwgmsUs6o/s1600/0000%2B0%2Bcroc%2Btears.jpg
Do as we say, not as we do – meanwhile our waffling mendacity will generate an even larger smoke screen to fool the naïve ….
Nearly HALF of the world’s population, more than 3 billion people, live on less than $2.50 a day. And more than 1.3 billion people live in extreme poverty on less than $1.25 a day.
1 billion children worldwide are living in poverty and according to UNICEF, 22,000 children die each day due to poverty.
There is a distinction between “relative” poverty, “absolute” poverty and “starvation” and the Joseph Rowntree Foundation’s claim that 14 million (more than one in five) people in the UK live in “relative” poverty is overshadowed by large elephant who knows that 2.6 billion people in the world lack any form of basic sanitation or running water (200 million tons of human waste go untreated every year) making the UK’s “poor” people “relative” world millionaires.
Merry Christmas everyone!
So why are the British poor struggling to put food on the table?
Hi Richard,
as I used to work for KPMG and being an auditor of international conglomerates I learned that you really need to be an accounting expert to understand the profit shifting business and on top of it you need to know the particular accounts and the way transactions are posted. I strongly believe the Big Four audit companies have to confirm that no MATERIAL profit shifting has happened during the reporting year of a multi-national conglomerate. The Big Four know what materiality means and it is often used for an excuse not to report about certain things, however, it should work the other way as well. In my view even with country-by-country reporting it would be difficult if not impossible to stop a smart accountant to continue with the profit shifting business and I do not believe that any tax investigator – if the smartest ones – will have a decent chance to find out about smart profit shifting within a reasonable time frame. However, if the Big Fours have to confirm in the audit report – they have been auditing the particular group for several years – they must and will know if material profit shifting is going on or not. As an example it took me more than 5 months auditing over three years to really have a good year how the particular profit shifting business of one of the largest Dutch companies worked. Secondly, if it has to be confirmed in the audit report society can make the Big Four liable and even go after the auditors personally. I strongly believe in personal liability. Again, country-by-country reporting is important and having forced the auditors that it has to be confirmed in the yearly audit report that no material profit shifting has happened during the reporting year would make it much easier and less costly for civil society to put the spot light on the matter and clean this mess up! I wonder what your views are on this topic?
I personally doubt that audit can play the role of reporting on profit shifting
I do instead think that the Big 4 need to come out in favour of country-by-country reporting and for its inclusion in financial statements under an IFRS. Then we could have the data to decide for ourselves
Tax authorities are now getting this. Why shouldn’t we?
I agree the country-by-country reporting is a must to have as well as having it included in financial statements.
Up to a certain extend I can share your doubt about the role of the auditors. However, I hope the local tax investigators particularly related to international organisations will have access to the information (accounts) in several countries. In my entire career I did not have the pleasure to meet many smart and initiative tax investigators and if there was one he was silenced by his superior for political reasons. This I have not only experience in Switzerland more importantly in Germany.
I also prefer in addition to cause a conflict of interest within the Big Fours (tax advisors vs auditors because the separation of those two fields will not make a big difference in my view).
Lastly, the auditors not only have to serve based on the law the company, the shareholders and creditors but also to the public as well.
Anyhow, I was curious about your thoughts on this topic. Thx.
[…] published my disquiet about a letter from the Big Four accounting firms on the issue of inequality yesterday, suggesting when doing so that they were part of the problem […]