Would you go to the gym and post this video on YouTube to get a job?

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Despite most economies around the world looking like they are coming out of the recession, it’s still a tough job market out there and there are challenges in getting the perfect job.

Owen Hargreaves, the former Manchester United player has been plagued by injury during his career. He has played at the very top of the game though having represented England but is currently looking for a job.

He’s no doubt got the skills to play for a leading club and at 30 is still very much at his peak in terms of age.

But what about his fitness levels. Are other top clubs going to pay serious money to employ somebody who may not be able to play if injury hits again?

The corporate equivalent would be asking whether you would pay a significant golden hello and high salary to an employee who may well not be able to work for you shortly after joining you.

“Hats off” to Owen though as he’s taken the unusual step of posting a series of workout videos on YouTube showing him undertaking strenuous exercise. This will hopefully convince prospective employers that he is fit enough to play football again at the top level.

There is one particularly impressive video of him shown below and that is of him undertaking what can only be described as freestyle aerobics on a treadmill.

Personally, I don’t think I’ll try this at the gym tonight though as somehow I feel I’d be unconscious at the back of the treadmill with the treadmill belt spinning around my head within a few seconds of trying to run backwards…

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Which is worse. A $3 billion fraud or taking $100 and giving it back the next day?

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Taylor Bean & Whitaker were one of the largest privately held mortgage lenders in the US.

Paul Allen was their CEO and involved in all the key areas of the business. Unfortunately for a lot of people Mr Allen also became involved in the fraud which led to the Taylor Bean business being closed down with 2,000 people losing their jobs.

The fraud also contributed to the collapse of Colonial Bank in the States after they purchased hundreds of millions of dollars of Taylor Bean mortgages.

Two major European banks also suffered as BNP Paribas and Deutsche Bank lost nearly $2 billion as a result of buying various corporate paper from Taylor Bean which was not suitably backed up by collateral.

A $3 billion fraud with thousands of people losing their jobs. Clearly a serious crime.

The end result was that Mr Allen was jailed for just over 3 years.

Meanwhile at the other end of the spectrum in terms of crime against financial institutions and the financial amount involved, a teller at Capital One bank in the States was approached by Roy Brown who put a hand under his jacket, claimed it was a gun and demanded money.

The teller handed Mr Brown 3 piles of money but he only took one $100 bill.

Mr Brown then had a change of heart and the next day handed himself into police and told them that his mother didn’t raise him that way.

He was homeless and told police that he needed the $100 to attend a detox centre.

Despite Mr Brown’s dramatic change of heart he was subsequently sentenced to 15 years in prison for the robbery.

So in summary, $3 billion and 3 years vs. $100 and 15 years…

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Do auditors have friends and can they sing?

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“I’m an auditor so I really don’t have that many friends”.

This was one of the quotes from Steve Beguhn in the short movie below.

In case you haven’t heard of Steve he works for (or after the performance below it may now be “worked for”) pwc in America.

I’ll keep this blog entry short as the question is whether the Big 4 auditor did well or embarrassed himself during his recent performance on the reality TV show “American Idol”.

I’ll leave it up to you to decide but one thing for sure is that he’s a better singer than I am!

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Is it acceptable for a client to hold your audit files hostage?

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It seems that Deloitte has had a spot of bother in dealing with one of its Chinese clients.

When they initially won the audit for Longtop they were no doubt very pleased.

Longtop Financial Technologies Ltd., to give it its full name, is a Hong Kong-based maker of financial software. In 2007 it raised $210 million in a US IPO underwritten by Goldman Sachs and Deutsche Bank.

Things haven’t been going too well recently though. Their share price has plunged by 56% since last November reducing the company’s market value by more than $1 billion.

They have also just lost their auditors as Deloitte has just resigned.

Auditor resignations aren’t that unusual but in Deloitte’s resignation letter that was submitted to the U.S. Securities and Exchange Commission there are a few items which to put them in non technical language, sound “extremely dodgy”.

The full resignation letter submitted to the SEC can be found here but some extracts of the letter showing the highlights (or lowlights) of some items that Deloitte identified at Longtop are as follows (note that the bold emphasis on certain words was made by us):

[Start of extract from  resignation letter]

As part of the process for auditing the Company’s financial statements for the year ended 31 March 2011, we determined that, in regard to bank confirmations, it was appropriate to perform follow up visits to certain banks. These audit steps were recently performed and identified a number of very serious defects including: statements by bank staff that their bank had no record of certain transactions; confirmation replies previously received were said to be false; significant differences in deposit balances reported by the bank staff compared with the amounts identified in previously received confirmations (and in the books and records of the Group); and significant bank borrowings reported by bank staff not identified in previously received confirmations (and not recorded in the books and records of the Group).

In the light of this, a formal second round of bank confirmation was initiated on 17 May. Within hours however, as a result of intervention by the Company’s officials including the Chief Operating Officer, the confirmation process was stopped amid serious and troubling new developments including: calls to banks by the Company asserting that Deloitte was not their auditor; seizure by the Company’s staff of second round bank confirmation documentation on bank premises; threats to stop our staff leaving the Company premises unless they allowed the Company to retain our audit files then on the premises; and then seizure by the Company of certain of our working papers.

In that connection, we must insist that you promptly return our documents.

[End of extract of resignation letter]

I have to say that my initial observations are that Deloitte did the right thing in resigning!

Longtop however have released a press release in connection with the resignation and included the statement that they have “initiated a search for a new auditor.”

Somehow I’m not convinced that the other top auditing companies will be rushing out to win Longtop as a client.

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Would you have made this mistake?

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When did you last send an email?

I guess it was a few minutes or hours ago. Maybe at a stretch it was a couple of days ago.

What about when you last sent a letter?

My guess is that it may have been weeks or even months ago and therein lies one of the challenges faced by Post Offices around the world. Namely, more and more people are relying on emails, texts and phone calls to communicate as opposed to letters.

I must admit that if I decided to suddenly send a letter then it would be a bit of a hassle for me to go and buy a stamp. That in itself would put me off posting a letter.

I don’t want to sound lazy about this but after getting used to the convenience of emailing from my mobile device the thought of heading to a post office to buy a stamp and then posting the letter seems rather slow.

The Danish Post Office though has just launched a novel system to make it easier for people to send letters.

Instead of having to buy a stamp to put on the letter, people can send a text message from their phone to the post office and get back a unique code which they write on the envelope in the place of a stamp.

The cost of this is 8 DKK (£0.92p) and the charge for the code will be added to a mobile user’s phone bill.

This is a nice idea and it removes the hassle of having to go somewhere to buy a stamp.

Meanwhile on the other side of the Atlantic, there was a bit confusion with the designers at the United States Postal Service.

They recently launched a new design of postage stamps which had an image of the world famous Statue of Liberty.

The design was finalised and 3 billion copies of the stamp were printed.

All was well with the stamp until one eagle eyed stamp collector noticed that the image of the Statue of Liberty was not that of the famous statue in New York harbour but instead was a picture of the fibreglass and foam half sized replica which can be found outside the New York – New York hotel and casino in Las Vegas and can be seen in the photo above.

The stamps show a close up of the face and crown of the statue and the US Postal Service has said that they will leave the stamps in circulation.

Meanwhile, the owners of New York – New York in Las Vegas are no doubt extremely pleased to be the first Las Vegas casino to be featured on a US postal stamp.

In fact, they are probably so pleased that they have texted all of their friends.

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You would have to be a really sick person to agree with this…

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According to pwc, the British do it twice as often as the Americans and Japanese.

Within the UK, if you happen to be a civil servant or state employee then the chances are that you will be doing it 20% more often than the average UK worker.

After polling over 2,000 firms and public sector employees around the world, pwc found that UK workers have an average of 10 days unscheduled absence from their jobs each year.

This is approximately twice the level that is found in the US (5.5 days) and Asia-Pacific (4.5 days), but roughly the same as Western Europe (9.7 days).

They estimated that the total sick days taken across the UK cost the economy in the region of £32 billion a year.

Richard Phelps, HR consulting partner at PwC, says that “absenteeism is a malaise for British business.

With sickness accounting for the lion’s share of absence, the question for employers is what can be done to improve health, morale and motivation. The line between ‘sickie’ and ‘sickness’ can be blurred, with disenchantment at work sometimes exacerbating medical conditions or preventing a speedy return”.

Whilst genuine sickness should be looked upon sympathetically there are no doubt a certain number of people who maybe take a day off due to “sickness” when in fact they aren’t really too ill to go to work but instead just fancy an extra day’s holiday or two.

Now, as a lot of you are members or students of professional bodies I’m sure you’re too ethical to throw a “sickie” and will only be out of the office on sick leave if it is a genuine illness.

Less scrupulous friends of yours though may have noticed that there are various sites on the internet that provide advice on how to take a “sickie” from the office.

One bit of advice is that when phoning up your boss to tell him or her that you are ill you should “make the phone call to your boss whilst lying on your back as you automatically sound groggy”.

This also means that you don’t even have to get out of bed to make the call…

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If Prince William and Kate Middleton were accountants then surely they…

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I’ve just finished watching the wedding of Prince William and Kate Middleton and I have to say that it was a very moving and impressive event.

Very many congratulations to the happy couple.

From a slightly less romantic angle though there should also be congratulations to the project managers that were involved in organising the wedding as everything seemed to go extremely smoothly.

Westminster Abbey was looking splendid and has to be one of the best locations for a wedding but I wonder whether the organisers maybe should have considered holding the wedding at One Moorgate Place instead?

As shown at their website, One Moorgate Place is a “beautiful, romantic venue for your wedding reception”. The location offers:

•    Elegant rooms with stunning architectural details and decorative features

•    Beautiful and unique backdrops for photography

•    Exquisite menus designed to your specification

•    An experienced wedding planner assigned to your event

•    Central location in the City of London

This all sounds very nice indeed but if you’re an accountant in the UK then the name of the location may itself also sound very familiar.

One Moorgate Place is the home to the Institute of Chartered Accountants in England and Wales (ICAEW).

As well as being called One Moorgate Place, the location is also known as Chartered Accountants’ Hall and is headquarters to ICAEW. The building is rather nice and was designed by Victorian architect Sir John Belcher RA and built in 1890.

So, although William and Kate are not accountants, if you happen to be an accountant who is thinking of getting married to another accountant then what better place to tie the knot than at the home of the ICAEW?

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It took 26 years to find out that he’s not an expert…

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One of my friends is a TV producer and he’s recently been working on a documentary that just amazed me and I thought you may enjoy hearing of.

In 2007, Gene Morrison was convicted of a number of serious offences, including perjury.  The reason for this is that he had successfully posed as an expert forensic scientist for some time, having taken some money from people and having even appeared repeatedly as an expert witness in court.

When I say “some time”, I could be more precise: I mean 26 years.

When I say “some money”, I mean over a quarter of a million pounds.

He was one of the favoured expert witnesses used in the Manchester area by the UK’s Crown Prosecution Service.  Why?  Apparently he had a good reputation.  How reliable is reputation as a way to assess somebody’s competence?  Read on…

As my friend was telling me this story, my mind turned to audit standards. In particular, my mind turned to ISA 620 Using the Work of an Auditor’s Expert.

In criminal investigations where forensic evidence is important, it’s clearly necessary to obtain expert testimony.  The same applies with specialist areas of accounting that require non-accounting knowledge.  Either the auditor can prove the necessary skills themselves, or can commission an expert.

The problem here is that where evidence comes from somebody who is less expert than they claim to be, evidence that appears to be reliable is actually then worthless. Good quality forensic evidence is destroyed by being handled by a charlatan.

Doctor Gene Morrison MSc PhD (or to give him his full list of titles, Gene Morrison) had run his own company, with the grandiose title of Criminal and Forensic Investigations Bureau (CFIB) on the basis that he obtained the work, then secretly contracted it out to unwitting genuine experts.

He collected the cash, claimed the work as his own and kept almost all of the cash. His knowledge of forensic science appeared to come exclusively from the complete box set of the CSI: Crime Scene Investigation TV shows.

Astoundingly, it appears that in the 700 or so investigations where he provided expert evidence, not one lawyer meaningfully verified his credentials.  His statement that he was an expert appeared to be enough to be considered sufficient.  He appeared as a witness in court many times, somehow bluffing his way through cross examination.

The criminal trial against him was thorough, and the jury found him guilty of 20 of the 21 charges against him.

An auditor following ISA 620 could almost certainly not have been hoodwinked even once by Mr Morrison’s scam.  ISA 620 requires an auditor to verify the existence and quality of any qualifications an expert claims to hold.  Critically, it also requires that the auditor know enough about the subject material to discuss the matter with the expert and reach a concurring opinion with them.  This would surely be impossible with somebody who didn’t know a thing about the subject matter under discussion

He was eventually caught out when privately commissioned by some desperate and grieving parents who wished to know more of the circumstances of the sudden death of their son.  Their dissatisfaction with the bewildering contents of his report caused them to conduct some cursory investigation of their own; shortly followed by a phone call to the police.

Mr Morrison was sent to prison for five years.

One of my friends is a TV producer and he’s recently been working on a documentary that just amazed me and I thought you may enjoy hearing of.

In 2007, Gene Morrison was convicted of a number of serious offences, including perjury. The reason for this is that he had successfully posed as an expert forensic scientist for some time, having taken some money from people and having even appeared repeatedly as an expert witness in court.

When I say “some time”, I could be more precise: I mean 26 years. When I say “some money”, I mean over a quarter of a million pounds. He was one of the favoured expert witnesses used in the Manchester area by the UK’s Crown Prosecution Service. Why? Apparently he had a good reputation. How reliable is reputation as a way to assess somebody’s competence? Read on…

As my friend was telling me this story, my mind turned to audit standards. In particular, my mind turned to ISA 620 Using the Work of an Auditor’s Expert.

In criminal investigations where forensic evidence is important, it’s clearly necessary to obtain expert testimony. The same applies with specialist areas of accounting that require non-accounting knowledge. Either the auditor can prove the necessary skills themselves, or can commission an expert.

The problem here is that where evidence comes from somebody who is less expert than they claim to be, evidence that appears to be reliable is actually then worthless. Good quality forensic evidence is destroyed by being handled by a charlatan.

Doctor Gene Morrison MSc PhD (or to give him his full list of titles, Gene Morrison) had run his own company, with the grandiose title of Criminal and Forensic Investigations Bureau (CFIB) on the basis that he obtained the work, then secretly contracted it out to unwitting genuine experts.

He collected the cash, claimed the work as his own and kept almost all of the cash. His knowledge of forensic science appeared to come exclusively from the complete box set of the CSI: Crime Scene Investigation TV shows.

Astoundingly, it appears that in the 700 or so investigations where he provided expert evidence, not one lawyer meaningfully verified his credentials. His statement that he was an expert appeared to be enough to be considered sufficient. He appeared as a witness in court many times, somehow bluffing his way through cross examination.

The criminal trial against him was thorough, and the jury found him guilty of 20 of the 21 charges against him.

An auditor following ISA 620 could almost certainly not have been hoodwinked even once by Mr Morrison’s scam. ISA 620 requires an auditor to verify the existence and quality of any qualifications an expert claims to hold. Critically, it also requires that the auditor know enough about the subject material to discuss the matter with the expert and reach a concurring opinion with them. This would surely be impossible with somebody who didn’t know a thing about the subject matter under discussion

He was eventually caught out when privately commissioned by some desperate and grieving parents who wished to know more of the circumstances of the sudden death of their son. Their dissatisfaction with the bewildering contents of his report caused them to conduct some cursory investigation of their own; shortly followed by a phone call to the police.

Mr Morrison was sent to prison for five years.

The 18 page remuneration policy and the £6,500,000 bonus…

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IFRS 2 Share Based Payments has never been a popular accounting standard with many in the business community.

It’s also often unpopular with students, especially the deferred tax elements of it.  This is despite the fact that share based payments often provide an opportunity for easy marks (we promise!)

The reason given for finance directors’ dislike of IFRS 2 is often that it involves subjective estimation of the value of share options and other equity-based compensation.  This can be complicated and subjective.

Another reason why it’s unpopular might be that it involves stating the full truth of how much executives are actually being paid, including non-cash related rewards.

One person who is feeling the heat of this at the moment is Bob Diamond, who is CEO of Barclays Bank.  The bank has just published its remuneration report and it’s predictably controversial.

In an environment where many people, fairly or unfairly, blame perceived greed of bankers for the global financial crisis, CEO remuneration of a salary of £250,000 and a cash performance bonus of £550,000 might be considered brave by many.

But this is only a part of the story.

Once the expected value of equity based remuneration is included, the total figure rises to a bonus of £6,500,000.  In the days before IFRS 2, the total reported remuneration would have been less than £1 million.  No wonder some directors look on the pre-IFRS 2 days as the good old days!

If a person had invested £100 in Barclays shares on 31.12.05, those shares would now be worth £53.  This compares with a profit of 26% on FTSE shares in general over the same period.   At a time when shareholders have taken these substantial losses, this type of remuneration is likely to upset investors.  This possibly explains why the bank takes up 18 full pages to explain (or perhaps justify) its remuneration policy!

Is India about to join the European Union?

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At one stage or another as a business professional you’ll have to make a speech or presentation in front of a group of people. Sometimes it will be in front of a large group of people.

The chances are that you’ll probably feel a bit nervous as surveys consistently show that public speaking is one of the most feared aspects of business life.

Over my career I’ve been lucky enough to see some excellent presentations and have also seen some not so good presentations as well.

I’ve never seen a speech at the United Nations though but you would think that the speeches made at the UN, together with the delivery techniques of the speakers would be first rate.

Wouldn’t you?

India’s minister of external affairs did his country’s first speech since India recently began its 2 year term as a temporary member of the UN Security Council.

Mr Krishna, aged 78,  is a very experienced diplomat and delivered a speech on the subject of security and development.

He took his notes and got off to a confident start.

It all suddenly started going a bit wrong though when after a couple of minutes he read out the phrase, “I’d like to express my satisfaction regarding the happy coincidence of having two members of the Portuguese-speaking countries”.

Further into the speech he then started stressing the importance of improved coordination between the UN and the European Union.

It was at this stage that a colleague interrupted him to advise him to stop reading as he had in fact mistakenly picked up the wrong speech and was reading the speech that had been prepared by the Portuguese representative.

So, the next time you are preparing a speech maybe it’s an idea to write your name in big capitals at the top of your notes.