Direct News

Honesty legislation just won’t work; Call for ARA entries; Satisfaction isn’t working; Scholarships for rural women; Wholly-owned tax rated fair; Managers have come a long way; McEwin takes Singapore post; Financial danger period; Audit committee reform a priority

World Bank and international adviser on corporate governance, Mervyn King, spoke to Sydney AICD members in early July on "Boardroom shake ups – local phenomenon or global trend?" The former South African Supreme Court judge said intellectual dishonesty was today's core corporate problem and told guests President George W. Bush's call to legislate against intellectual dishonesty was impossible. "You can legislate, but you can't stop it," he said.

Call for ARA entries

Entries for the 2003 Australasian Reporting Awards, sponsored by the AICD, will commence on 1 October. The awards provide an opportunity for organisations from all sectors of the economy to benchmark their reporting to stakeholders against world best practice. Organisations submit their most recent annual report for review by panels of expert adjudicators. The 2003 awards dinner and the annual seminar, workshop on reporting and feedback sessions will be held in Melbourne in May 2003. Contact ARA, Locked Bag 17, Australia Square, NSW 1215. E-mail: ara@arawards.com.au

Satisfaction isn't working

Research released by the Spherion Group has found 82 percent of survey respondents are not happy with their current jobs, compared to only 16 percent who are happy. When asked what was most important to them in a job, 38 percent replied that enjoying their work was a major factor, while 15 percent said learning and developing was important. Only 13 percent felt challenging work was important. Participants were also asked what they found most appealing in an employer, 38 percent saying being valued and respected was most important.

Scholarships for rural women

A two-year government/-industry scholarship scheme to provide women in rural industries with the chance to attend a prestigious AICD course was announced by Senator Judith Troeth, Parliamentary Secretary for the Minister of Agriculture, Fisheries and Forestry. Industry Partnerships – corporate governance for rural women, is jointly funded by Australia's rural R&D Corporations, and the Commonwealth Department of Agriculture, Fisheries and Forestry – Australia. Applications will be called in late August. For further details visit: www. affa.gov.au/ruralwomen or call (02) 6272 5625

Wholly-owned tax rated fair

Less than a month into the new regime for taxing wholly-owned company groups on a consolidated basis, business has expressed confidence in it, according to a PricewaterhouseCoopers tax survey. The survey of 65 major Australian based businesses found that 77 percent are comfortable with the new tax consolidation regime which commenced on 1 July, and only 18 percent have a low level of confidence in it. Furthermore, an overwhelming majority (83 percent) expect the overall impact of tax consolidation will be positive or neutral, while 88 percent of businesses surveyed believe tax consolidation would impact positively or neutrally on shareholder value. Most believe in the long term, the cost of tax compliance under the consolidation regime will remain at 43 percent or even increase (40 percent), despite the Government's claims it would be less.

Managers have come a long way

Lifelong learning, effective personal managerial skills and the ability to lead with trust and integrity are the top three management issues for Australian managers a new survey has found. The Australian Institute of Management/-Monash University Australian Business Leadership Survey reveals that corporate Australia has come a long way since 1995, when the Karpin report found managers were poorly trained compared to their counterparts in the US or UK. The survey clearly demonstrates managers' commitment to ongoing skills development is the number one priority. The results form part of a major survey of 1918 Australian executives, and are based on written comments made by 524 executives (27 percent of all respondents). Communication, articulating goals and inspiring others was the second highest ranking issue.

McEwin takes Singapore post

Dr Ian McEwin has made his farewells to the AICD Law Committee, leaving Australia to become head of the Competition Policy Unit in the Ministry of Trade and Industry in Singapore. McEwin, believes he is the first non-national in the department, but promises he will not be the Fels of Singapore. To colleagues he says: "I look forward to seeing you over there – duty free red always welcome."

Financial danger period

With the new financial year here, many companies have entered a financial danger period, when the reality of the previous year's unprofitable trading and cash-flow crisis begins to hit home. The situation will be magnified by a Taxation Office crackdown on companies behind in their GST and PAYG payments. The prospect of further interest rate rises and the squeeze it will put on the economy through decreased consumer spending, will put added pressure on business. Companies with overdue Business Activity Statements face hefty fines accumulating for each day that the statements are overdue – adding another pressure to an already financially stressful time. BDO Kendalls' business recovery partner, Michael Owen predicts the ATO will be obliged to swing into action now that it has issued some 20,000 penalty notices to late BAS filers. "The ATO will begin the debt recovery process it has been warning businesses about for the past few months," Owen said. "The ATO estimates more than 96,000 businesses have overdue BAS and companies unable to find the money to pay old tax bills will really be in trouble when the ATO comes knocking.

"Not having put aside money for GST and PAYG is a sure sign that a company may be on the verge of collapse," Owen said. "Problems with cash flow are obvious signs things are going badly. "The use of group tax, GST or superannuation monies to fend off creditors is also a signal that major problems are afoot. "Severe penalties can arise for directors who continue to tread down this path."

Audit committee reform a priority

Further damaging revelations about the role of the audit committee in the collapse of Enron underline the need for companies to sweep away boardroom secrecy and face up to the issue of auditor independence, the Association of Chartered Certified Accountants urges. The members of an audit committee should receive a fee which is adequate to enable them to devote sufficient time to the company's affairs. That fee should, however, be based on the time spent on the company's affairs. Rewarding non-executive directors with stock options, whose value depends on the company's performance, creates a wholly unacceptable conflict of interest. ACCA has called for a range of corporate governance reforms. It wants these to:

• strengthen audit committee independence;

• enable them have a much larger say in the appointment and activities of external auditors; and

• reduce the influence of executive directors in these matters.

ACCA's proposals include:

• making it mandatory for every listed company to appoint an audit committee;

• introducing measures to increase the independence of audit committee members;

• ensuring that audit committee members are paid adequately but that this pay is not dependent on the company's share price or short term performance; and

• banning auditors from providing for their audit clients certain services (e.g. internal audit, financial system consultancy) which could jeopardise their independence.

Disclaimer

The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.