Long lunch laughs and prizes; Home truths still relevant; Consoling consultants; Grand Prix luncheon; Super idea, but a bad practice; Ethical searches; Looking at new ways to tax; Global accountability; Policing the accountants.
Long lunch laughs and prizes
Comedienne Jean Kittson released the tensions of the corporate year with a diagnosis of the effectiveness of oestrogen and testosterone levels in corporate life, while opera troupe, The Three Waiters, serenaded a few fortunate female directors at the NSW Division's annual Christmas Long Lunch. A Santa sack of prizes were distributed to the 496 guests during the three-hour luncheon. For those who had trouble over the quiz question, the seven virtues again are prudence, courage, temperance, justice, faith, hope and charity. A special vote of thanks is again extended to the main sponsors of the event – Heritage Fine Wines and The Ready Group.
Home truths still relevant
"At a time when increased international competitiveness, slow economic growth, and creasing government regulation are major concerns of business, the role of directors and the wider issues of corporate governance are more important than ever. "Today, there are higher expectations of boards of directors fuelled by the demands of institutional investors, developing shareholding interest groups and an investigative financial press. At the same time there are the increased requirements of regulatory bodies and exposure of directors to greater threat of litigation." Sounds familiar doesn't it? Well, if you thought the above words were spoken in the past few days you are wrong. This was part of the speech by AICD national president Sir Eric Neal almost 10 years ago to mark the opening of Company Director House at 71 York Street. AICD is now happily ensconced in its new premises on Level 25 at Australia Square. Company Director House is no more. The words remain just as relevant today.
While most industries enjoyed a profitable 2001, the trend for companies to cut costs has hit one sector - consultants - particularly hard. Dean McMann, CEO of the Ransford Group, a Houston-based company that tracks the consulting industry told Business Week magazine that 2002 looks like a bad year for the consulting industry with many boutique firms laying off personnel. He predicts that a few hundred boutique firms will go under as demand for strategy, operational and technology advice remains weak. The growth areas in the consulting industry are likely to be outsourcing and security.
Grand Prix luncheon
If the fast lane is your scene then note down AICD's upcoming Grand Prix Luncheon on Tuesday 26 February where you'll hear of aggressive track strategy from the Jaguar Formula 1 Racing Team. Contact Rose Banham of NSW Division for more details - 02 8248 6681. The politics of spending The Howard Government's credentials as an economic manager took a battering recently from Commonwealth Auditor-General Pat Barrett. His report suggests that the Government is now the biggest taxing administration in history, with the biggest spending in 15 years. It will not surprise anyone that this assertion is based on the accuracy or otherwise of the way the accountancy rules are used. Barrett maintains the GST is not a state tax but a federal tax enacted by federal law and collected by the ATO. If this is the case it is not surprising this would throw the Budget revenue numbers out of whack.
Super idea, but a bad practice
Last month, the Government received a serve on its paper on prudential regulation of the superannuation industry from legal firm Freehills which suggested that the Government wants to commercialise super- annuation. Whatever the merit in the criticism, the clear view of all participants in the market is that industry regulation is the least of the problems. A better outcome would be to reform the entire industry first, including the greed is good ethos that operates from government taxes to hidden fees.
A survey of executive search firms by Cornerstone International, a global group of executive search firms, suggests that, too frequently, the emphasis is on winning the work at the expense of delivering a solution. The problems of the executive search industry were outlined in an article by Duff Watkins managing director of Re:Search Executive Search Consulting, the Sydney partner firm of Cornerstone. His findings included:
• The breaking of the unofficial two-year rule by search firms on poaching executives from their own clients;
• Failure to disclose that they have clients in conflict with another client's business;
• The attempt to become a one-stop shop as opposed to promoting expertise in one area;
• Leaking information to newspapers that a particular CEO is interested in becoming CEO of another company.
• Failure to properly explain to clients that finding a CEO takes time and money.
• In the US there have been instances where an executive search firm tells a company "pay us a $1 million a year and we won't recruit anyone from your company."
Looking at new ways to tax
We had the Ralph Tax reforms in 1999 and then we went back to the drawing board to have a close look at Option 2, the method whereby company tax is calculated on the basis of asset and liability values rather than an interpretation of income and deductibility expenses. Next month, the Government is to release a draft of Option 2 for public consultation. In the meantime, the accounting bodies in co-operation with the Board of Taxation are looking at an Option 3 scenario to consider incremental changes to the existing tax system.
The Global Reporting Initiative (GRI) convened to develop an internationally accepted framework for sustainability reporting has just appointed its first board of directors. GRI has designed Sustainability Reporting Guidelines that more than 100 companies are using to measure their performance. The Australian representative on the board is Judy Henderson from Australian Ethical Investment. HK governance caught short A recent study by Standard's and Poor's says Hong Kong companies are failing to meet global corporate governance standards. The primary reason for this is that Chinese companies are still family dominated and reluctant to bring independent directors into the inner circle. Even if Chinese companies go public, the level of the offering is only around 25 percent, leaving the family firmly in control. Of course no one would ever make the same assertions about the family-owned media companies in Australia.
Policing the accountants
Harvey Pitt, the lawyer who once did legal work for major accounting firms and is now chairman of the Securities & Exchange Commission has announced a new, independent oversight board for the US accounting industry. It aims to take-over monitoring and peer-review duties from the Big Five and other accounting firms and to exercise new powers to discipline errant auditors. Pitt told Business Week Online that he's going to put accountants in their place: under the thumb of the SEC. This may explain why ASIC released a survey on accounting practices late last month that has come under fire from the industry because it is was only a small sample of the accounting industry.
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.
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