I was engaged in email conversation with tax justice activists yesterday, when the following was said to me:
The idea of a dual agenda - limiting what the big four can do and who for; imposing transparency requirements to ensure some greater accountability for what they are doing - is very appealing... And this is the time for it, if ever there was one.
I agreed, responding by saying:
To me it is important to do both, largely because I think a lot of what they do might be severely limited by transparency. It would become transparent just how much they try to bifurcate markets and their role in them.
This last point is key to me. The more I study and write about the Big 4 (and I am doing quite a lot of both at present) the more obvious it is that they dissemble almost continually, and probably to the point that they are almost unaware they are doing so, such is the consistency with which they do it. Examples help here.
They claim to be one firms for marketing purposes, and even publish some limited data as such.
They claim to be global, and yet are only accountable locally.
Despite claiming to be the custodians for accountancy in the world in many of the places where they are located they publish no accounting data at all.
They claim to be trusted tax advisers and yet they spend much of their time undermining the tax system.
They suggest that they are the auditors to the world, but they have so corrupted the concept of audit that it no longer means accounts are true and fair and instead means that a check list of disclosure has been completed.
Since they have been dominant in accountancy the purpose of accountancy has been shrunk from serving the pubic interest to serving the need of some investors alone.
These firms advise on regulation, but spend much of their time advising their clients how to evade it.
The Big 4 would have the world believe that they believe in free markets when actually they spend most of their time promoting rentierism - which is the process of a few extracting as much unearned income as possible out of the economy in which others labour.
These firms profess a belief in good governance, and yet fail to evidence almost any aspect of their own governance structures within their own organisations.
All these issues need to be addressed. In many cases that will require regulatory reform that they will bitterly oppose. But it also starts with the requirement that these firms become accountable both globally and in every single market in which they operate.
The idea that an auditor should themselves be unaccountable is now utterly unacceptable.
But the reason for that accountability extends beyond the audit issue. If these firms were accountable then the bifurcation of roles that they now adopt would be harder to sustain, and that is vital to bringing them, and their clients, to account.
Quite literally, the Big 4 need to be held to account.
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I think your angle is worthy but it could be more obtuse if you reformed the Big 4’s customers. Tackling people who get the wages of sin is a worthy cause, but dealing with the clients who actually pay their wages would be even better. But how?
There is a campaign to end prostitution by criminalising the buyers but decriminalising the sellers. In this comparison the Big 4 are the sellers, but they’d go out of business quite quickly and become maths teachers instead ( or something similarly useful ) if the buyers of their services were breaking the law.
Alas, campaigns for assymetric legal frameworks have got somewhere in Sweden and Ireland for example, but they will forever get nowhere in Great Britain because of the neoliberal conspiracy at the heart of government which says that if one party should be free to sell something, then the other party should be free to buy it.
As Aeron Davis says, there needs to be a public enquiry about the role and practices of accountants.
A public enquiry would be apt because from what I have seen the accounting firms are at the very centre of wealth/value extraction world wide which is very detrimental to society.
This is what the Kingman Review is, in effect
I published the first of my submissions yesterday
I am working with others on another
The rot set in, in the professions, a long time ago . In the old days no professional could limit his ( it was always ‘ his ‘ then ) liability, but as soon as he could incorporate his day as a ‘ professional ‘ were over. We didn’t realise this at the time; in the 1980’s . The Big 4 developed from this time and although there is no equivalent in any of the other professions
the conflicts of interest which are at the heart of this question are prevalent in all those professions . The Great Financial Crash of 2008 could not have happened if investment banks ( which were all partnerships formerly ) had not been able to incorporate .
It seems that incorporation is really a useful legal fiction designed to allow certain people to get away with various criminal acts. Suppose we simply abolished it and held individual directors to account for the actions of their organisations?
The problem with abolishing it is we have had advantage of the economies of scale larger companies have provided
Limited liability is one of those things that should not work but did
I can live with it, so long as it is accountable and regualated and so long as those who abuse it are brought to account
Accounting has a long history of involvement in such as ‘blood debts’, ‘jubilees’ and chronic failures such as the Athenian Treasury’, various Domesday books and the role of paper money in bubble investments. In the 19th century we made it illegal to make accounts illegible, amidst a ruck of bank failures. In the 80’s I worked in AI to replace much human in what seemed professions amenable to expert system replacement. We failed, though it is possible to think of a world without a dominant cognitive class. It feels unlikely accounting is much more than invisible thread managing to conceal its real activities. Perhaps the mistake is thinking of it as a expert system in the first place?
I think it an expert system
It may not be used by experts
There are two problems here that must be addressed to put the failure of audits right.
One is that the big audit firms (not just the 4) are not independent and financially liable for their opinions and the second that the accounting standard setters and regulators have allowed reporting standards to so obfuscate accounts that they no longer have much meaning.
The purpose of an audit was, and should be, to hear (hence the word auditor) an independent experts opinion on the financial position and health of a business in which the owners and managers are separate so that the owners could assess the stewardship of their investment. We need to restore this purpose.
This will only happen now by regulation; tinkering with the status quo is akin to straightening the deckchairs on the Titanic. But does any political party have the will required?
I think John McDonnell might
On this he has the right advisers
thanks
Good Evening Richard & Others
After looking after my mother in law at home for the last 2 years or so we reluctantly had to hand over to a home recently as her condition had deteriorated . This means that my partner has now got some time between supporting her Mum in her new home and finding a new life. She has expressed a wish to go into accounting (believe it or not).
Can anyone recommend a suitable course than get her started as a practitioner fairly rapidly? My partner is a lovely person, principled and honest (she is an ex teacher quite exhausted by her past profession so she is also a hard worker) and I think the profession needs more people like her anyway by the look of things.
Many thanks in anticipation (sorry to muscle in with a personal request of sorts),
PVSR
I would start with the Association of Accounting Technicians – AAT
Good luck!
Thank you muchly.