Cameron: Overseas aid is taxpayers money not yours!

David Cameron is wrong to insist that the £9 billion ‘overseas aid budget’ should be “ring fenced”. At a time when the people of this country are facing great hardship, it is foolhardy to believe that he will have widespread support for delivering UK taxpayers money to countries such as Pakistan and China.

Notwithstanding the huge amount of taxpayers’ money that is being committed in our name, we all know that a good deal of this money is squandered, you only have to look at some of the brand new 4×4 vehicles that are driven my Government officials in some African countries, while their people starve. More often than not, these vehicles are paid with using foreign aid; this is hardly a success story. Furthermore, whilst some of these countries can rely on foreign aid, they are not being encouraged to stand on their own two feet.

Everyone has to tighten their belts at times such as these and our Government should be no different. I full accept that investment in health and education must be maintained, although I would qualify that statement by insisting that there should be a root and branch review to ensure that we are receiving value for money. However, overseas aid is an area that can and should be cut, at least until this country is back on its feet…because like it or not, our finances are in a precarious position.

Cameron keeps telling us how we will all have to accept a period of “austerity”, which will include increased direct and indirect taxes. Okay, I accept that this is inevitable, but how dare he foist new taxes on the British people before he has taken a scalpel to expenditure on items such as overseas aid? Cameron needs to remember that there are many people in this country that live in squalor, often council owned high rise flats that are not maintained or are well past their sell by date. These people are forgotten, whilst huge sums are given away overseas.

How many times have we heard the ‘youths’ of today tell us that the reason there is so much petty crime and a gang culture is because they are “bored” and they have “nowhere to go”? Yet, youth and community centres are routinely closed down due to lack of funds…the result is that youngsters are left roaming the streets. As a consequence, people within the community are scared, they have to suffer petty crime and their quality of life is dramatically reduced. The priorities of this Government and for all intents and purposes, the next Government’s, are completely at odds with what is needed and wanted by the people of this country.

It is high time all politicians started to listen to the people of this country and not simply pay lip service. We are all tired of people at the top telling us what we want and what need, rather than listening to us!

Gordon Brown’s Temper Tantrums

Much has been written about Gordon Brown’s management style and specifically about his legendary temper tantrums. He and some of his loyal colleagues may dismiss this as a man that is committed, passionate and someone who gets angry with himself, but that it complete rubbish, he knows it and so do his colleagues. The fact remains, reports of Gordon Brown’s behavior in the private sector would almost certainly lead to the dismissal of the protagonist.

This is a prime example of what happens when you place people with little or no real management experience in charge of a huge organization…such as Government. Yes, he was Chancellor, but the fact is, unlike many people in the private and even the public sector, Gordon Brown (and many of the ministers who now come to his defence), have never worked through the ranks. Therefore, they have little or no conception of the need to lead by example and communicate their message clearly and concisely. The bottom line is, bullies make very poor managers, instead they breed a culture of fear, contempt and hidden truths.

Brown has admitted that he throws things; well what sort of message does he think this type of behaviour sends? That he is in control, measured, responsible? I don’t think so! Anyone who defends such actions are as bad as the perpetrator, because they are seen as complicit, or perhaps even endorsing the behaviour, so victims have nowhere to go. It is an appalling situation.

I have seen senior managers that adopt a similar style to Gordon Brown and based on my experience of how people react to such people, I am not surprised that Brown fails to achieve anything! Bullying managers will normally experience the following;

1. Their line managers adopt a similar management style and this behaviour is eventually considered ‘normal
2. As information moves up the chain it is ‘sanitized’ to avoid facing the wrath of their line managers. Management is told what they want to hear rather than the facts.
3. As the information and management is disseminated to each line manager, it is further sanitized to suit the recipient, therefore, by the time it reaches the top of the chain, it bears no reality to what is happening at grass roots level. This is fact, not supposition.
4. Some of the brightest people within the group are crushed, because their views differ from what senior managers want to hear, this prevents new ideas and fresh initiatives being presented. This results in ‘same old, same old, rather than fresh ideas…anyone watching this Governments lack lustre performance for the past few years will recognize this trait.
5. Meetings end up with everyone agreeing with the ‘chair’ rather than challenging or presenting new ideas.
6. Because everyone agrees with the boss, the boss thinks that he can ‘walk on water’ that he can do no wrong. This then becomes self-perpetuating! Any boss worth his salt would ensure that he had people around him that were prepared to challenge the status quo.

There is another undeniable fact that people like Gordon Brown needs to know…the lower down the ranks the people on the receiving end of his tantrums are, the harder they are hit. Fellow ministers may shrug off his attempt to show how macho he is by throwing a telephone at the wall, but junior employees will almost certainly shit themselves! What a big man you are Mr Brown!

It is well know that Gordon Brown likes to micro manage (this is often sold as a virtue!)…but it is in fact another futile act. The reality is, where senior mangers micro manage; they create resentment in the ranks, therefore as soon as their attention is directed elsewhere, everything returns to normal. This is how managers get their own back on interfering bosses who think they are the only people that know the answers or solution.

What Gordon Brown has not learned, is that the larger the machine, the more important it is to sell your ideas, before attempting to enforce them. He has made the classic mistake that many senior managers do, that is to assume that because they are the ‘big boss’ they can issue orders and it will just happen…because they decree it so. Utter bollocks! It just doesn’t happen that way. New ideas and initiatives have to be sold up and down the line…otherwise they will get bogged down in the process…there is another important lesson for Gordon Brown and people like him, that is being the boss does not always mean that you are right! So a good boss will have someone around him to keep his feet on the ground and a person who is not frightened of challenging him.

The bottom line is Gordon Brown doesn’t have what it takes…and I suspect neither does David Cameron…the only difference is Gordon Brown has had his chance and screwed it up, if Cameron gets his, I earnestly hope for the sake of the people of this country he learns a lot faster. In this election, I suspect we will be voting not for the people or the party we want, but the people or the party that we dislike the least. If this is democracy, they can shove it!

Democracy has already disappeared

Much has been said over the weekend regarding the Damian Green affair, with most commentators suggesting that our democracy is damaged, at stake or in peril. I would not argue with any of these descriptives other than to say our democracy was under threat a good deal earlier than this high profile incident.

Whether it is detention without charge, law officers being able to store telephone call details, text messages, email content and web browsing habits, or the ability of the police to take DNA off a subject even if they haven’t been charged. All of these new laws have been brought in, ostensibly to aid the fight against crime and terrorism, but as we have already witnessed, neither the police nor the government are shy of using anti-terror laws in completely inappropriate circumstances. As each new piece of legislation has been passed, so we have had to wave a fond farewell to some of the fundamental rights that we have lost in the process. Rights that we have enjoyed for hundreds of years. Yet crime is not falling and terrorism remains the same threat as it was before.

The government has become the ‘bitch’ of the police service, giving them have whatever they want, whether it be detention without charge, 30,000 taser guns or the ability to monitor telephone calls on the say so of a senior officer rather than a judge. Opposition parties, by contrast, have acted like the governments lapdogs, providing a less than spirited defence of the rights of the individual. In an effort to preen themselves in front of the TV cameras, or gain a few column inches from a compliant newspaper, members of parliament have forgotten that they are responsible for upholding the rights and liberties of the citizens of this country. They have failed miserably….look at how many departments that have been labeled “not fit for purpose”, now consider how this label could be identified with most of the government and a large number of other MP’s!

As a consequence of this governments preoccupation with gaining more and more state control, we as a people have become all the poorer. Not in economic terms (that was for different reasons), but in terms of freedom. Our right to privacy has gone forever, because this government has allowed nearly every aspect of our lives to be monitored and/or recorded and then allowed upwards of 800 agencies, both public and private, access to that information. It is an outrage. Worst of all, every MP that failed to speak up for the people of this country on this issue have been complicit in our demise, further, every newspaper editor that has failed to raise these issues for fear of losing scoops from a minister have failed their readership.

Of course you can’t get the genie back into the bottle, but members of parliament on all sides should seek to use the Damian Green affair as a signal that a complete review is now needed of all legislation passed that has provided government and the police service with unprecedented powers over the people of this country. British citizens are supposed to be the masters, not the servants, New Labour policies have dispensed with this long held tradition. Purists may say I am wrong, but it is my contention that when so much power has been passed to government and the tools or agents of government, such as the police service, security services and so on, the people of this country become the servants of state, not the other way around.

We may retain the vote, but little else and if we allow further removal of our rights, we could end up being a basket case like Zimbabwe, with question marks over our entire electoral system. Melodramatic maybe, possible most certainly, after all, Hazel Blears has already indicated that she wants the legal power to prevent publication of certain stories in the mainstream media and has pointed out that she is not in favour of bloggers. Who 20 years ago would have guessed that we could lock people up for a month with no charge, seize the assets of another country using anti-terror laws, monitor and store every telephone call, text message and email, force identity cards on a reluctant public? The list goes on, but you get the picture, it isn’t just possible, we are already well on our way.

If ever there was a justification for a public enquiry, something I do not normally advocate, it is now. It should be wide ranging and concentrate on the legislation that has been drafted by this government which as a consequence of its introduction, has removed, reduced or eroded the civil liberties and rights of the people of this country. Further, they must look at what the original intention was and find out how these laws have been used, abused or mis-used. This enquiry must then have the power to order that government introduce legislation to allow either an amendment to, or the repeal of any legislation that is not as intended or has simply gone too far.

David Cameron could lead this charge and I suspect he will have a great deal of support, certainly from the public and most likely from the LibDems and a few Labour backbenchers. Or, he could let the opportunity pass by and be picked up by Nick Clegg. For as sure as night follows day, there will be a massive public backlash when it starts to sink in just how many of our rights have been sacrificed in a fight against terrorism, something, incidentally that this country has faced for most of its existence.

If as a consequence of the Damian Green affair members of parliament only seek an exemption for MP’s, then I think the public will have a very good idea who our elected members look out for and it would most certainly not be us. They could be reminded of this at the ballot box assuming we manage to retain that right. Don’t laugh, it could happen, just look at our ruling elite!

Prostitution, pimps, trafficking and criminal intent

There is an interesting post over at Power to the People on the government announcement that they intend to introduce new legislation to protect women that have been forced into prostitution by people traffickers or pimps. The post does not cover the rights and wrongs about prostitution, but instead the issue surrounding a fundamental change to criminal law, in that there is no need to demonstrate intent only “strict liability”.

The following paragraph probably sums up best the argument contained in the post:

I am no law expert, but by introducing a “strict liability” clause into criminal law, (I believe it is already used in civil law), means a serious criminal offence can be committed without there being any intent. Now I know that ignorance of the law is no excuse, but this legislation means that even if a man asked the necessary questions and was given the appropriate responses, he is still playing a game of Russian Roulette, with odds that would not be lawful in a casino! Worst still, the man doesn’t even need to have sex in order to commit the offence, he just has to conduct the transaction.

If true, this is a very worrying precedent being set by government ministers, perhaps made worst by the fact that Harriet Harman is actually a QC. She more than anyone must know the consequences of a piece of legislation that can find a man guilty of rape simply because he conducted a transaction for sex with a prostitute.

Surely this is what is wrong with this government. They try and intefere in everything, with little or no knowledge of the problems, issues or implications. It is always a sledgehammer to crack a nut, draconian and penal laws introduced against a backdrop of political correctness or a wish to grab the headlines. The Big Brother Database was one way in which this government attempted to run roughshod over the civil liberties of the people of this country. Now they seek to introduce a strict liability clause which means that no ‘act’ has to take place for a very serious offence to have been committed which could result in a life sentence.

Vulnerable girls forced into prostitution are entitled to and must be protected. However, the laws are already there for the police to use, so why don’t they? If 70% of the girls are working under duress, then the police should have no problem bringing prosecutions. I don’t know how many ‘sex transactions’ take place everyday, but if 70% of them could lead to a serious offence being committed, surely the courts will be inundated with criminal cases. Also, we need to start building new prisons now, because I suspect, that this law will not stop the oldest profession in the world. In a worst case scenario, it could make the girls more vulnerable and drive it underground where it will be impossible to protect them.

Those that sponsor or support this bill in its current form should hang their heads in shame for they seek to change a fundamental aspect of criminal law in this country and fail to achieve the objective set. As for Jacqui Smith and Harriet Harman, they should resign immediately, because they have demonstrated that they are not fit for the high offices that they hold.

Has Hazel Blears been reading our blogs?

Based on an article written by Communities Secretary, Hazel Blears for The Guardian newspaper, it is a reasonable question. Especially given she naively attacked political bloggers a couple of weeks ago. Now she appears to have used these same blogs for her own research into what is wrong with politics. In this particular article, she was specifically taking a swipe at the BNP, no doubt because they make an easier target than other mainstream political parties. But, as we know, her comments could apply to any party that is gaining votes at Labours expense. Here is a summary of some of the points she made.

• Politicians from all parties must work hard to win back the trust and confidence of disaffected voters by proving that mainstream politics has the answers they seek
• Politics required a revival of local political culture, a significant shift of power from the centre to the community and politicians who look and sound like the people they represent
• Estates have been ignored for decades; voters taken for granted; local services that have failed; white working-class voters who feel politicians live on a different planet

Now of course, delivering rhetoric is one thing, delivering solutions is quite another. As we know, Hazel Blears may be vocal and enjoy getting her name in the press, but lets face it, not many people hang onto her every word. So whilst it is a pity that a more serious politician did not make these comments, lets hope one of them can read, because she does get to the root cause of why so many people feel both disenfranchised and disaffected with politics.

Of course there are many other issues, such as the creation of a nanny state, the constant waste of taxpayers money, the government’s introduction of Big Brother, voyeuristic, privacy invading, civil liberty busting programmes designed to control and oppress the people of this country, as well as, of course, the complete screw up of our economy. However I believe there are two comments that she made that are particularly relevant today and those are ‘politicians need to look and sound like the people they represent’ and ‘voters feel politicians live on a different planet ‘ . 

These two comments could not be applied exclusively to the Labour Party, although that would be an excellent start, they would apply to MP’s of all parties. With only a few exceptions, once our members of parliament are elected, and they enter the house of commons, they really start to believe that they are a cut above everyone else and power goes to their heads. The only time they become ‘human’ again, is when they are begging for our votes! Most MP’s are, or become in a very short period, pathetic self-serving, self-righteous, self-obsessed dickheads, interested in the position, rather than the responsibility or why they were put there.

Nonetheless, as always, Hazel is keen to highlight problems. However as with most Labour MP’s (and David Cameron), short on ideas of how to address them. May I suggest therefore, that a good start is for the main political parties to start selecting the person they want to represent them at election time and in parliament, from ordinary citizens, rather than career politicians or party activists? Party activists and career politicians lose their personality or individuality on the way, learn to do as they are told, rather than what is right and more often than not, are the very people that see getting the job as more important than doing it. Better surely, that prospective MP’s are selected based on a passion for their local community, values and making a difference, rather than simply seeking a political career?

Anyway, at least we know that whilst Hazel Blear may not like the home truths that arise from those prepared to take the time to comment on political issues, at least she is prepared to accept some of them may be quite pertinent. Even if she is not capable of making a difference.

The folly of a reduction in VAT

Suggestions by so called experts and hints by Gordon Brown that the proposed tax reductions will take the form of a VAT reduction will be a complete waste of time. Whilst I accept that Gordon Brown may want to adopt his usual smoke and mirrors approach to how much a tax cut is worth, no-one will believe him, with some justification. A cut in VAT is a reduction in a consumption tax, this will not make people feel as if they have more money in their pocket, instead, they will just feel that their money goes a little further on some vatable items, which excludes groceries, utility bills etc.

By way of an example, a £50 item with VAT charged at 12.5% instead of the current 17.5% would see a reduction of just £2.50, assuming that retailers and traders do not use the opportunity to shore up their own margins. Would this be enough to get people into the high streets spending their money, I think not? Retailers are giving far more away in so called special offers. But from Gordon Brown’s perspective, he can hail it as a massive giveaway, given he is prone to use an over simplistic, almost child-like set of sums, that allows him to maximise the value of a tax breaks, even in the full knowledge that the impact on government finances would be a fraction of the number made public. We have seen this time and again in his budget speeches, anyone remember the 10p tax debacle?

If any package is going to work, then the public need to know that they have more money in their pocket, it would be a hard sell in the current climate to convince people that their money will simply go further. In addition, this is one of those occasions when Gordon Brown must not try and bulls**t the public, nor should be tinker with taxes, it needs to be a bold and dramatic cut in direct taxation, something in the order of a 5% reduction in direct taxes. Anything less is doomed to failure and as anyone with half an ounce of commonsense knows, a delay in a period of such a significant loss of confidence and economic downturn will lead to a prolonged recession or require a much larger cut in the future.

Much is being said about how to pay for the tax cuts. Well there are any number of government projects and initiatives that could be curtailed or cancelled which need not affect education or health services, a good start would be to look at the vast sums being spent on information technology projects, with highly questionable returns. That notwithstanding, the government has no choice, they must give the economy a boost, irrespective of what it does to the short-term finances of this country, one thing is for sure, other developed countries will, in spite of Gordon Brown’s suggestions, not because of them.

However, the government must not stop at personal taxation, they also need to look carefully at small business. This sector has been severely affected by the downturn, in terms of less business, slower payers and bad debt provisions. Given the SME sector employs some 12.5m people, it is self-evident that many will be struggling given the tax on employment (NI) and tax on business (business rates) that the government use to punish enterprise. They will need a package of measures which includes, but should not be limited to, a reduction in business rates and the reversal of employers NI contributions for those that employ 10 people or less. Given many will struggle to make a profit, there is little point, at this stage, in reducing corporation tax, although is has to be said that Brown’s recent increases in corporation tax for small business, does not encourage entrepreneurship, so much for being business friendly.

David Cameron is due to provide his suggestions for tax cuts today, but given he is not in government, I doubt that will make much difference to our everyday lives.

Welcome to Big Brother Britain

Well all is not as it seems. This is not a sign in the arrivals hall at Heathrow, although it probably should be, instead it is a big welcome to the new political blog Big Brother Britain & Civil Liberties. The initiative of the author of Power to the People, with contributions from David Davis, it is destined to become a leading site for resisting and highlighting attempts by the Labour government to do away with our long held and highly prized civil liberties.

There are quite a few blogs that deal with civil liberty issues and political blogs that touch on so called Big Brother issues, however, this particular blog is intended, as I understand it, to bring all of these topic under a single umbrella. The author has made it clear that he is keen to have as many people as possible contributing posts and comments in order that it can quickly become an authorative reference site and be used as a campaigning blog.

I have agreed to write posts for the Big Brother Britain blog and I would urge others to offer similar tangible support. Together with the RESIST initiative introduced by Shrewd Mammal, there is a real opportunity for some momentum if people with similar concerns get behind this initiative and support, contribute to and visit the blog.

UK affairs, do the British care anymore?

Yes, it is a rhetorical question, but I found myself asking this last night. At a time when the UK PLc is supposed to have racked up debt of some £1.3 trillion, or if you prefer, over £50k per household. At a time when the engine house of our economic activity and employment, small and medium sized businesses are suffering. At a time when the UK government seeks to gain more and more control overs its citizens in the latest Big Brother Britain move. What do we find time to complain about? Yes, you guessed it, Russell Brand & Jonathan Ross and their cheap prank.

It is no big deal whether you think this prank is funny or not, I personally think it was a cheap, cowardly attack on a 78 year old man. But I did not find the need to join 10,000 other people and complain to the BBC. Why? Well, does it really matter, Sachs is quite capable of demanding an apology and any more airtime given to Ross and Brand, just boosts their egos and raises their profiles? It is the proverbial storm in a teacup.

But, what I would really like to know is what motivates 10,000 people to complain about a couple of pranksters, when you couldn’t get a fraction of that number to write to their MP about the plight of small business, the state of our economy, or the  ‘Big Brother Britain’ state intrusion into our everyday lives? Really, has the world gone mad. If this was not enough, what of the prime minister, the leader of the opposition and other cabinet ministers and members of parliament. They all managed to spend time to offer up their opinion and what they think should be done about this little spat.

So, how come, when Gordon Brown or David Cameron are asked about serious issues like the the plight of small business, they skirt the issues with bland statements, such as “we will do what is necessary” (GB), or “small business needs help with what’s going to be an extraordinarily tough time” (DC)? Yet, when it comes to this small spat between celebrities, they can’t wait to tell us what they think and then what they would do (or they think others should do) to address the issue. On this issues, they are unequivocal and unambiguous. So how come they can answer direct questions with clear answers, when it comes to minor issues such as a celebrity spat, but when they are asked questions about things that matter, they ignore the question, or offer a bland, generic response?

Little wonder then, that so many voters feel so disenfranchised and disconnected from government, politics and politicians, when they set the priorities in such a inane way. That said, it is high time the public started to bite back, our politicians are in a privileged positions, we must demand and expect that they act in our interests, not their own. If 648 politicians want to lord it over 65m people, then they must demonstrate that they have the capability and are in touch with the electorate. They need to be coming up with constructive proposals to deal with the financial and economic crisis we are facing. They need to keep clear of celebrity.

It may just be me, but I feel a chill in the air, not from the deteriorating weather, but by a growing number of people that still care about what happens to our Country and are willing to be more vocal, forthright and action orientated to ensure that our politicians earn their keep or lose their jobs!

Government needs to reduce taxes not spend

Gordon Brown & Co have indicated that they will borrow in order that they can spend their way out of this recession, but in all honesty, I think this is a bit simplistic. Firstly, I do not believe that you can spend your way out of a recession. But secondly and as importantly, any spend would be on infrastructure projects and this would, surely, limit any benefit to the construction sector.

In my opinion, recession is about people having less to spend and a lack of confidence in the economy. I am sure there are other factors, but these are the two that tend to come up time and again. Spending on infrastructure projects is likely to cost £100’s billions and will have to paid over the next 25 to 30 years. This option has limited appeal to the masses. On the other hand a bold government, or an effective opposition party, could propose something more significant.

One of the reasons people feel so poor, is that the money they have left over after they have paid their taxes and national insurance contributions buys much less. Added to that, millions more people today, than say, 20 years ago, are directly affected by the mortgage market and therefore, interest rates. My plan is a relatively simple one, because you do not have to have complex solutions to simple problems.

Government should reduce direct taxation by 5p in the £. This would cost no more than £8bn per year and would therefore be much cheaper than investing in infrastructure projects. This would immediately help people feel richer, more flush and they are therefore, more likely to spend their money. I do not think this should be done via increased allowances, or tax rebates, because these are seen as, respectively, something that can easily be eroded or a temporary bonus. Socialist should forget the fact that everyone would benefit from the 5p tax cut, who cares, if it means that those that need it most are included.

In addition, I would go for a substantial cut in interest rates, perhaps 2.5%. Inflationary pressures are on the eane and the benefit to households of a 2.5% cuts would be immediate, tangible and above all welcome in these difficult times. Banks should be instructed to adopt the 2.5% rate cut. Combined, these two move would provide the public with a massive confidence boost, they would feel more able to spend and the feel good factor would return. My solution does not rely on bringing forward PFI projects that are expensive in their makeup. Instead, it aims to put more money into peoples pockets, at a relatively low cost to the government, taxes could for example, rise in 5 years or so when the economy improves. Over 5 years, this measure would cost less that £40bn. And, lets face it, this is our money in the first place.

A substantial reduction in interest rates will aid a quicker recovery of the property market. To avoid another property boom, interest rates could be managed, but the initial boost in confidence would be incalculable. In addition, is the market starts to recover and property prices more affordable, then first time buyers will start bargain hunting, because they will feel that the decline has been halted. This would allow an exponential increase in property prices at a sustainable rate.

Simultaneously, the government needs to look its legacy of wasteful initiatives over the past 11 years. It is estimates that this alone has cost the taxpayers some £110billion. If they addressed this, then there would be no need to recoup the 5% tax cut at a later date: https://britishpolitics.wordpress.com/2008/09/09/gordon-brown-legacy-economic-competence/

I am happy for people to pick holes in my argument, but unlike this government which just want to spend more on projects no-one wants, or the opposition party that recognises there are real problems, but offers no tangible solutions, mine is simple and effective. If anyone has any better ideas, please feel free to post here! I made clear in a previous article that this country needs wholesale tax reform: https://britishpolitics.wordpress.com/2008/09/15/tax-benefit-reforms-uk/

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Bank auditors should also be held responsible

At the moment one day pretty much blends into another, but on one of the evening news programmes this week, another fat cat, fee-earner had the temerity to say, when questioned, that auditors had played no part in the financial mire that is the bane of every UK taxpayer. I have to admit, that I wanted to throw something at him, because I have been arguing for weeks that the auditors have failed in their duty to the shareholders and worst still, shall be one of the few ’industries’ that will make money out of this fiasco, through company administrations, receivership’s, consultancy fees and so on.

Lets look at the generally accepted definition of a Finance Audit:
The process of verifying a company’s financial information. Auditors are certified public accountants who are independent of the corporation. An auditor examines a company’s accounting books and records in order to determine whether the company is following appropriate account procedures. An auditor issues an opinion in a report that says whether the financial statements present fairly the company’s financial position and its operational results in accordance with Generally Accepted Accounting Principles (GAAP).

And here is a common definition of an Auditor
Auditor is the person appointed to conduct an examination of the records, to form an opinion about the authenticity and correctness of such records, by verifying the correctness and reliability of the recorded transactions from the evidences available, opinion and inference reachable based on his expertise.

Most, if not all, stock market listed companies in this country and, for that matter, around the world, use the services of one of the so called ‘Big Four’ accountancy firms. These big firms charge huge sums for their audits, often running into £millions, and the audit teams are lead by high ranking ‘fee earners’. In other words, as the businesses, banks and financial institutions they audited expanded, so have the fees earned by the auditors and yet, not one audit firm appears to have asked any questions about what is now being described as “questionable accounting” practices within the financial services and banking sectors.

For example, do we know of any audit firm that qualified a set of accounts within the banking sector because of the heavy reliance on a particular financial model, such as in the case of Northern Rock? Has an audit firm raised any prior concern over the way that ‘bundled’ mortgage debt was traded, sold and then re-sold, with each party taking a profit or commission, without really knowing the risks or true value of the asset.

You would think that after Enron and Worldcom, auditors would be even more cautious, especially given investors and business people alike, will have increasingly come to rely on the expertise and the independence of the auditors before they make financial investment decisions related to the company being audited. It is absolutely essential that the audits of company’s that rely on external investors for funding are wide-ranging, thorough and probing, a failure to do this and ask questions, is, in my impinion a dereliction of the auditors responsibility to the shareholders. If an audit is not indepependent, or in-depth, why on earth do so many companies pay so much money out every year for their audits?

I personally believe that, when the investigation begins, as it surely will, the part played by company auditors also needs investigating. Given they will be the only party to have profited in the ‘boom’ as well as profited out of the ‘bust’, yet they were also the only party, other that the regulatory authorities, that had a duty to ensure that they reported the facts, discovered questionable practices and reported their findings in an open, direct and a frank manner. I do not say that any of these accountancy firms are culpable, because I would have nothing to back this up with (other than logic of course), but I can say that, I believe they have failed, for the most part, in their duty to appropriately and competently assess the risks associated with some of the more questionable practices adopted by the banking and financial industries.

I also believe that shareholders that have lost money should consider individual or class actions against any audit firms that are left wanting in this current mess. For them to be preening themselves in front of the cameras, whilst rubbing their hands with glee, behind the scenes, is stomach churning. If there job was not to highlight risks, operating and reporting practices, asset values and profit claims, what on earth were they charging such massive audit fees for? The Audit Firms must not be allowed to extract themselves from any form of responsibility whilst the rest of us are left to pick up the tab and the pieces of what is left.

Article Source: Power to the People