Negligence & Liability Archives - Page 4 of 6 - Emile Woolf writes

Inflated asset values, suppressed liabilities – it comes to the same thing

I see from April’s Accountancy that Goldman Sachs and Morgan Stanley have decided to switch from mark-to-market to historic cost accounting for their loan portfolios. Goldman’s stated purpose is to protect its loan book from swings in value. From memory, they didn’t seem to mind when the swing was upward – even though the market […]

Read More…

Clear? Coherent? Transparent? Intelligible? How would you describe our reporting standards?

UK accounting standards are celebrating their 40th birthday: Statement of Standard Accounting Practice No.1 on associated companies was issued in 1971. The initiative was given a boost in 1973 following exposure of Robert Maxwell’s deceits at Pergamon Press. In a hotly contested takeover battle Pergamon’s share price was supported by accounts that included a wildly […]

Read More…

Can rules-based accounting facilitate fraud? Enron revisited

We are approaching the tenth anniversary of the collapse of Enron. Have the lessons been learnt? Enron was the US energy giant that failed only 12 months after its share price rated it seventh largest corporation in America. A handful of tenacious journalists penetrated the miasma of filed data and revealed that the bulk of […]

Read More…

Psychosis grips British banking. Yet who will break the deadlock?

I have written regularly on banking folly – a subject everyone now knows to be inexhaustible. In Accountancy, March 2005, I wrote: “The size of the credit mountain is without precedent…… should we ask whether it is sustainable? Or should we worry?” I noted that five of Britain’s top-10 companies were banks, compared with none […]

Read More…

Back to square one: Accounting safeguards do not work

The most sombre issue to emerge from the world’s current financial woes is that of trust. Putting it succinctly, who can you trust in markets where it pays to deceive? it was all in conformity with existing EU accounting rules.. Take Greece’s desperation to sell its bonds to reduce the size of the European bailout. […]

Read More…

Behind the words, public sector waste lies hidden

Whose analyses, explanations or remedies can you trust? One of the most valuable insights to be gleaned from a pukka crisis is how inexpert the experts are. It was Irving Fisher, the great Professor of Economics at Yale University, who declared: “Stock prices have reached what looks like a permanently high plateau.” He said that […]

Read More…

The cycle of litigation – be warned

Litigation warning – remember the cycle!  The pattern of litigation tends to be cyclical since it shadows the economic cycle. When there is general prosperity and businesses flourish there is still plenty of litigation (when is there not?) but its character reflects boom-time activity. Businesses buy other businesses and then claim that they overpaid. Although […]

Read More…

Reflating the banking bubble while the real economy lags

How sustainable is the alleged economic recovery? A brighter outlook certainly appears to be in evidence in parts of the City. Construction work on glitzy office buildings has resumed. A stroll through the Royal Exchange takes you past packed wine bars, expensive restaurants and boutiques displaying the most opulent array of branded merchandise – jewellery, […]

Read More…