Thursday, August 05, 2010

Carpet burns

It seems that no-one is responsible for the Feltex float and swift collapse. Former Feltex shareholders must have carpet burns over the recent not guilty verdict on the Feltex managers. The omission of declared loan arrangements to their shareholders was perfectly fine. They have Ernst & Young's bright young things in auditing to back them up, and the judge sez that all the paperwork was in order.

The poetic Paul Litterick sez:
It was only an 'undred million, guv; hardly worth mentioning, so we didn't mention it.

Or, to put it another way, believing that one's deceit meets all the necessary requirements of the accounting standards is now considered to be acting with integrity, the action of honest men. Although those men knew about the default on the $100 million debt and chose not to tell the shareholders of the company they were mismanaging, their apparent belief that the accounting standards allowed them to do so makes their deception a matter of integrity.

In effect, the phrase "they thought they could get away with it" is now synonymous with "they thought they were doing the right thing."
And auditors? Don't talk to me about auditors. The audit floor of every accounting firm is where baby bean counters freshly lambed from the university tubes go to get their ACA papers waved above their noses. Unquestioning, naive little things. Lambs to the slaughter, really.

I worked in a biggish company once that had cleared an audit no worries. The manager admitted that the idiot auditors couldn't find sand on a beach.

There are only a handful of audits that can really strike fear into practitioners of blurry accounting practices. The IRD, the SFO, and the Commerce Commission. The Securities Commission and the NZX has a hell of a way to go before they get as mongrel on the dodgier spectrum of their shared fiefdoms.

But poor bloody Mum n Dadland. As if 1987 or the finance company wreckage didn't learn them, this decision should. Stay in the property bubble!