Member Since: 17th Jul 2002
Professor University of Essex
18th Jan 2018
What I am saying is that accounting logic is faulty. It harks back to the days when the embryonic accounting profession mainly did bankruptcy work and the emphasis was on looking at the worth/value of assets individually rather than collectively and how they complemented each other to generate cash flows. When Carillion bought other businesses it sought to acquire many economic advantages including government links, names, etc., which conventional accounting logic does not recognise as assets. so it is all lumped into a meaningful figure.
18th Jan 2018
"Massive goodwill means massive overpayment for acquisitions". No, it does not necessarily mean that. Goodwill is mainly there because of the primitiveness of accounting thought. Let us lo0ok at an example, a pair of shoes may sell for £50 but accountants are not used to recording the cost of the whole. they like to record costs/value of items individually. so they ask what one shoe and then the second shoe is worth. The answer may be £1 each. This formulation leads to a goodwill of £48 but there are no missing or lurking assets. In the market, assets are traded at whatever price they can fetch and buyers pay on the basis of whatever the cash flow generating potential of the collection of assets, which complement each other, may be. Accountants can't cope with that then revert to old and discredited practices. The term goodwill mystifies financial reporting and does not tell users anything about the nature of the asset/advantage used to generate cash flows. In the case of Carillion, it is doubtful that even conventional accounting logic should have enabled it to report a massive goodwill figure as it was in dire financial problems, had low margins and was technically insolvent.
1st Dec 2017
Companies House is unfit for purpose. It should be the first obstacle for money launderers but is not. The Mafia and others have no difficulty in forming companies in the UK as this article shows
20th Sep 2017
A comment on another story about KPMG - FRC has buried its investigation of KPMG and HBOS audit. Of course, revelations in another country should also alert regulators like the FRC. After all, the firms claim to have global standards. How do we know that what went on in South Africa does not happen in the UK?
A little more on KPMG and HBOS audits. The FRC has a history of announcing investigations and then burying them. Where is the evidence to show that the investigation was not worth carrying out? The Treasury Committee found evidence and hence pressurised the FRC to act. Transparency should be a key element in regulation but we don't have that with the FRC. FRC shows no initiative either. It agreed to investigate HBOS audit some 9 years after the event. Clearly, there is no urgency.
FRC is too close to the auditing industry. It is not effective, independent or robust and does not do anything on a timely basis. Its own accounting and auditing standards are also sources of failure (think about accounting for derivatives, expected-loss model, etc.) and under its watch by its own admission, many companies have paid illegal dividends. It makes much of the fines that it has levied on big firms but does not tell people that the fines are passed to the RSB responsible for regulating the firm or the individuals. so ICAEW has been having windfalls whilst the victims of poor audits are left to whistle. FRC is not fit to be a regulator.
18th Sep 2017
The real problem is that the UK does not have a central enforcer of company law. Even where we have regulators they are too close to the industry and will sell their souls to ensure that they get a good job after a stint at the regulatory body. Look at the FRC - funded by big firms and populated by their personnel. Fines levied on big firms are passed to the ICAEW rather than victims of poor practices. Without independent, robust and accountable regulators, all laws will continue to flounder.
7th Jun 2017
I commented on this yesterday in another thread and explained a little bit about Land Value Tax.
7th Jun 2017
Accountants are also mothers, fathers, brothers, sisters, daughters, sons, investors, neighbours, savers, pensioners and human beings. How did you decide which bit in the article is not about counting, accounting, accountability, tax, business, regulation, life or aspirations? Are accountants as human beings not interested in any of these things? Some might not be but this one certainly is and I am grateful for this thoughtful article even though I disagree with some of it.
6th Jun 2017
£10 an hour is not a lot these days and will barely enable some to survive and certainly will not enable them to buy a house or a car. Numerous statistics show an increase in the working poor. I don't think it is fair that taxpayers should be subsidising employers paying poverty wages. Of course, there would be different views about it but there is little evidence to show, so far, that the minimum wage has had a negative effect on the economy. Even if everyone got academic credentials there will still be jobs with low pay as some sectors of labour market are poorly organised or are unable to effectively differentiate themselves from others. So the question is how low/high should it be? That, I think, is best decided by society as whole and at least people have a chance to indicate their views through the ballot-box.
There is no such thing as a "Garden Tax". Over 150 years ago Henry George proposed Land Value Tax (LVT), something which is now practiced in some US states and countries such as Denmark (since 1924), Singapore, Taiwan and Hong Kong. LVT was also supported by Milton Friedman who said that it was the "least bad tax" and even Winston Churchill called for it. The key idea is to base a levy on the basis of land value and that has absolutely nothing to do with gardens or anything else. Labour manifesto only says this "We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term". It does not say that it is going to impose it. As there are lots of criticisms with Council tax and business rates I would have thought that a review is long overdue.
5th Jun 2017
You may not like the costings and that's fair enough but at least Labour has done something that no other party has. Of course, hard to pick holes in other parties' analysis because they have not provided any. I am not inclined to put the IFS in any pedestal either (for example, its analysis has given little weight to macroeconomic impact of putting more money in people's pockets or what Keyness called the 'multiplier' effect). Labour's version of FTT is entirely different from the EU's. Have you read it?
Wealth has percolated upwards and inequalities have widened, and that is not the sign of a healthy society or a sustainable economy. Personal debt is at around £1.5 trillion and average person has savings to cover them for about one month. Ordinary person's ability to spend and build a sustainable economy is exhausted. Workers' share of GDP is now at 49.5% (probably even lower as this figure includes footballers, directors, bankers and others), the lowest ever recorded. Too many hard working people on poor wages.
I am not rich but am one of those who would be hit by Labour's higher rate of income tax and am happy to pay it in the hope of building a sustainable, just and peaceful society. Over to you.
5th Jun 2017
Tax is just one variable in various corporate decisions. Scandinavian countries have higher personal and corporate tax rates and wages. Why? Because governments have invested in social infrastructure. No sign that corporations have abandoned those countries or Canada. would companies really abandon the world's 5th largest economy because they are asked to contribute more?
Tax from wealthy- In evidence to the Public Accounts committee, HMRC said that it only had capacity to investigate about 35 HNWIs in any year. It had only 85 transfer pricing specialist about a quarter of those at the Big four firms. HMRC needs resources and direction. Only 11 prosecutions for offshore tax evasion since 2010 (despite evidence handed on a plate - Swiss leaks, LuxLeaks, Football Leaks, HSBC Leaks, Panama Papers). HMRC goes after little people and despite Public Accounts Committee hearings no test cases against any giant corporation.
Railway subsidy is at around £6bn a year. Not much testimony to privatisation. Yes, civil servants are not very good at handling industry (look at the mess over PFI) but there are other models for managing nationalised industries in most of the other EU countries.