Finance should be a servant, but never a master. So when accountants and auditors become the story because of systemic failures and corporate malfeasance you know something has gone badly wrong. As big accountancy firms are increasingly embroiled in corporate scandals, how do we clearly define their role so they actually serve society instead of continually maximising profit for private and personal gain?
The Royal Bank of Scotland was bailed out to the tune of $45 billion – in return, the managers systematically ripped off their own customers and undermined the British economy. After hearing countless accounts in the House of Commons last week about how business owners were deliberately and systematically bankrupted and then left to, by its own words, “hang themselves”, the government announced its intention to do… well, nothing.
How much credence can shareholders of public companies safely attach to financial statements that carry a “true and fair” imprimatur from their auditors? Big-4 firms hold the lion’s share of public company audit appointments, yet they are regularly found to have issued “clean” reports on accounts that grossly misrepresent the results and financial position of client companies, causing severe damage to shareholders’ interests.
Since the 2008 financial crisis, UK authorities have been absolutely toothless when it comes to prosecuting bankers who’ve broken the law. Is it simple incompetence? Or is our regulatory system designed so that victims fall through the gaps, while banks are permitted to operate above the law. Joining us this week is former Met Detective and victim of RBS GRG’s long-running scheme to defraud its SME customers, Andy Keats, and researcher & campaigner, Joel Benjamin.
All those banks and other financial institutions that have gone bust, or been bailed out, over the past 20 years demonstrate that the sector’s corporate conduct has been wayward, to put it mildly. That these dodgy outfits are located in the UK, USA, EU, Japan – virtually anywhere – suggests that, at root, their problems may have as much to do with human nature as jurisdictional regulation.