Jul 24, 2009
Posted by admin on Jul 24, 2009 in Career | 0 comments
Indpendent CPA auditors are like referees in the financial reporting arena. The CPA comes in, does an audit of the business’s accounting system and methods and gives a report that is attached to the company’s financial statements. Publicly owned businesses are required to have their annual financial reports audited by independent CPA firms and any privately owned businesses have audits done as well because they know that an audit report will add credibility to their financial reports.
An auditor judges whether the business’s accounting methods are in accordance with generally accepted accounting principles (GAAP). Generally everything is in place and the financial report is a reliable document. But at times an auditor will wave a yellow or red flag. Some indicators of potential trouble include when the business’s capability to continue normal operations is in doubt because of what are known as financial exigencies, which could mean a low cash balance, unpaid overdue liabilities, or major lawsuits that the business doesn’t have the cash to cover.
An auditor must exercise professional skepticism, meaning the auditor should challenge the accounting methods and reporting practices of the client in order to make sure that its financial statement conform with accounting standards and are not misleading – in short, that the financial statement are fairly presented. Indeed, the words “fairly presented” are the exact words used in the auditor’s report.
A good auditor need technical know-how, but also needs to know how to be tough on the accounting methods of the client. His job is to be the agent of the shareholders and other users of the business’s financial report. It’s incumbent on an auditor to strictly uphold GAAP, and not let any irregularities slide.
There are a number of well-known companies that engaged in accounting fraud recently and that fraud was not discovered by the CPA auditors. Enron is one of these companies. In this case, the auditing firm, Arthur Anderson was found guilty of obstruction of justice because it destroyed audit evidence.
Jul 22, 2009
Posted by admin on Jul 22, 2009 in Public Relation | 0 comments
In the past few years, the anti-corporate movement (including those opposed to globalization) has gained a bit of steam.
What many people in the movement promote now is called Corporate Social Responsibility (CSR), the idea that corporations should be responsible to all of society and the environment, as well as to shareholders.
It’s a shame they’ve gained momentum. After all, without modern corporations we would all be poorer, and in particular, few of us could expect to retire comfortably. More than anything else, modern corporations exist to provide pension income.
Sure, corporations used to be owned by a few, extremely rich people. But, with the widespread adoption of pension funds and mutual funds, corporations now belong mostly to working people.
While it’s true the average working person has far, far less wealth than the average billionaire, there are many, many times more working people. That means company and government pension plans can invest vast sums of money into capital stock, making working class people the largest shareholders of many corporations.
From a communication perspective, I’m interested in knowing why Corporate Social Responsibility gets such good media coverage and so much attention. I’m also interested in knowing what we, as communicators, can learn from them.
For starters, the anti-corporate movement has a simple message: “Corporations have too much money and power; working people don’t have enough,” or some variation on that theme. On the other hand, my defence of corporations above is anything but simple, even though I’m pretty good at capturing ideas in words. Did your eyes glaze over as you read my description?
The ‘anti’ movement also enjoys the luxury of making a good (poor working people) versus bad (rich corporations) argument. That’s a moral argument, one that adds spice to any news story. On the other hand, the ‘pro’ side works largely with rational discourse and the ideas of economists.
Third, the protestors bring passion to the anti-corporate message. After all, this is a battle of good against evil, isn’t it? Again, the defenders of modern corporations and globalization have to rely on the prosaic science of economists.
Fourth, the label ‘Corporate Social Responsibility’ also helps the anti-corporate movement. Not only does the name act as a unifying point for its advocates, but it also implies that CSR is a good thing. After all, who could be against ’social’ and ‘responsibility’?
Now, despite their high media profile and ubiquitous presence, the advocates of CSR have a problem. They may be able to win the attention of reporters and editors, but they haven’t had much clout with the real decision makers, the people who run companies, pension plans, and mutual funds.
And, the decision makers aren’t likely to be swayed. They understand the role of corporations, and they know where their responsibilities lie. Even widespread public sympathy for CSR isn’t likely to have much effect, since they report to shareholders, not to society as a whole.
So, perhaps the final lesson we’ll take from the anti-corporate movement today is that, sometimes, great communication can only take you so far by itself.
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