Tuesday, 13 February 2018

"When people of the same trade meet together... the conversation ends in a conspiracy against the public"

In the light of that Adam Smith misquote, let's cast a wry eye on this self-preening article in City AM:

There is no need for a “Hippocratic Oath” specifically in relation to tax, as McDonnell called for, since chartered accountants already ensure that taxpayers – individuals, companies, and others – pay the right amount of tax due under the law. In this way, we help reduce the tax gap by supporting good tax compliance.

Of course, it would be naive to hope anyone would take this purely on trust. Which is why, in addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics...

But what is rarely mentioned is that almost a third of registered tax advisers are not members of any professional body. This means they are not required to follow any ethical or professional standards at all. If politicians truly wish to get tough and raise standards, ensuring that the high bar set by the chartered profession is applied across the board would be a good start.

Sub-text: raise barriers to entry by "regulating" everybody who isn't a Chartered Accountant, who nobly "self-regulate".

How effective is that "self-regulation"..? From The Daily Mail:

Britain’s big four accountancy firms have been savaged by MPs who have accused them of “feasting on the carcass” of collapsed construction giant Carillion and collecting more than £70 million in the process...

Veteran Labour MP Frank Field, head of the Work and Pensions Committee, said: “The image of these companies feasting on what was soon to become a carcass will not be lost on decent citizens. The former directors of Carillion are, unlike their pensioners, suppliers and employees, alright.

“These figures show that, as ever, the Big Four are alright too. All of them did extensive – and expensive – work for Carillion. PwC managed to play all three sides – the company, pension schemes and the Government – to the tune of £21 million and are now being paid to preside over the carcass of the company as Special Managers.

“It was perhaps telling that, with their three fellow oligarchs conflicted, PwC were appointed to this lucrative position without any competition.”

According to information published by the committees, KPMG has banked £20.2 million in fees since 2008, PwC £21.1 million, Deloitte £12 million and EY £18.3 million.

So 'not very' and yet again, we are presented with evidence that they are actually thieving scum.


Ralph Musgrave said...

Adam Smith's point partially explains the disastrous performance of the economics profession. That is, members of the economics profession are arguably more interested in scratching each other's backs and covering for each other, than in anything else. Though other respectable professions staffed by middle class boys and gals suffer the same defect.

For example, there are examples of senior economists who quite clearly think some of their colleagues are plain incompetent, but they never say so in so many words. So the incompetents stay in their jobs.

Graeme said...

So there is the sudut fee . And then other pieces of work. Given the declared revenues and profits of carillion there was not enough advice being given

Mark Wadsworth said...

RM ho hum, economics professors just go along with group think, mainly leftie group think, but also Home-Owner-ist and right wing group think. Most supposed economists and not economists at all, it's like the difference between "sportsmen" and "sports reporters".

G, do you mean "audit fee"? Either way, far too much 'advice' was being given, namely how to polish a turd, evade pensions liabilities, dress losses up as profits etc. See my latest post on how they did this.