Bernardt van der Linde, writes that regulatory requirements are forcing small auditing firms to their knees. The average accountant is planning to leave the profession within two years, down from five years not long ago. His article implies that the new accounting and auditing standards are overkill for SMEs. The benefit of these improved standards is far outweighed by the additional costs. Linda de Beer says that SAICA has been asking for relief for smaller companies for years. [Asking who? SAICA has the power to make the difference but does not seem able to do so.] The PAAB’s attitude is “an audit is an audit is and audit”. [Our profession will become redundant with this attitude. In the early days of the motor vehicle, Ford nearly went under with their attitude that “a car is a car is a car”! An audit can be a very valuable service to clients if the service is tailor-made for different circumstances. This attitude does nothing for the entrepreneurial sprit of our members. See my article on my website discussing “If architects thought like accountants.”] (19th, Page 46)
The SA market was unusual last year in that the all-share index beat the equity portfolios of all retirement fund manages covered in the Glenrand MIB review, with one exception – Allen Gray. [Read CawB Buzz for another portfolio manager who beat the index!] (26th, Page 57)
The following are some attributes of leaders:
I get rid of the saboteurs, build a strong cadre of disciples and move all the fence sitters to the positive side. I prefer face-to-face whenever possible. Lincoln was my favourite leader: He persevered and stayed focused. (A G Lafley)
I have fervour in what I believe in and put my trust in my staff. (Carley Roney)
I learn from watching other people. Bill Clinton is my favourite leader – when you are introduced to him it is as if you are the only person in the room. (Carol Bartz)
I look for integrity and clarity of thought. How a person attacks a problem is often more important than the conclusion arrived at because it tells one how that person will face other situations. (Stanley O’Neal)
It is important to listen to others. (Hank Paulson)
Remember the future and imagine the past. We need to imagine the past to learn from it and to make it relevant to the future. We need to remember the future because the future is shaped by decisions. (Paul Tagliabue) (December 19th, page 43)
Christopher Cox, head of the Securities and Exchange Commission in the US says that the accounting scandals we have weathered were made possible in part by the sheer complexity of the rules. (26th, December, page 94)
What if the Emperor, in the story about the Emperor’s new clothes, were to be brought up on charges of public lewdness? He would be acquitted because he never intended to go naked in public. He really believed he was wearing something, even if he couldn’t see exactly what it was. This is, in essence, the defence that the Enron executives, Ken Lay and Jeffrey Skilling, will be presenting. [The CEO and the CFO are trying to make out that they did not know that Enron was naked?] (23rd, page 43)
What will make the Enron case difficult to prove is that their outside accountants, attorneys and board signed off on most of the machinations concocted by management. (23rd, page 43)
Winning requires a sense of purpose and satisfaction comes from doing what is good and right. (23rd, page 55)
The team from Sanlam Private Investments predicts that the prime overdraft rate will remain at 10,5% for the next two years (2006 and 2007), RSA 10 year bonds will fall to 7% p.a. over that period and the exchange rate will drift to R6,74 to the $ by 2007.
What you always wanted to know but were too afraid to ask
A value investor looks for value, i.e. he is looking to find intrinsic value in a share. Typical value investors are/were Benjamin Graham (the father of this form of investing), Warren Buffett, and John Templeton (Allan Gray). These investors look at earnings, dividends and other fundamentals.
A growth investor, on the other hand, looks to capitalise on future growth in the company’s share price resulting from future prospects. (Julius Cobbett of Moneyweb)
Kenneth Lay, of Enron fame, says that he is entirely innocent and that CFO Andrew Fastow should take the blame. Fastow pleaded guilty last year and is expected to testify against his former CEO this year. (Page 160)
Duncan Mc Allister, an old friend and ex student who now works for SARS, has written a simplification of how to calculate capital gains tax for clients who have share portfolios. It is on SAR’s website. I will give you more information about this in the next issue.
Since the early 1990s almost 1 000 new “planet like objects” have been found in our solar system. The area where these objects reside is called the Kuiper belt. Pluto is one of these objects. One of these objects recently discovered is larger than Pluto, which brings Pluto’s standing of as a planet into dispute. A new probe called “New Horizons” has been launched by NASSA to investigate. We will all be the wiser in 2015 when the pictures from this probe are expected to be beamed back to Earth. [A good reason for me to hang in here!] (Economist, 14 January 2006, page 77)
The pass rate for the Chartered Financial Analysts part 1 examination held in December 2005 was 34% (compared to 36% for the June examination).
A medium sized audit firm in Durban has “blacklisted” Mafia Buzz! This firm is denying its clerks access to free education in the form of general knowledge, IFRS knowledge, valuations knowledge and investment knowledge. You know you have arrived when you get blacklisted!
A parastatal in Pretoria banned Mafia Buzz because the education officer objected to people phoning her and asking for a GAAP update!
I thought you would be interested in how business is done in the New South Africa. I was called in to advise a parastatal on some accounting issues. I spent two hours with them and charged them R1 000 plus VAT. To get paid I had to fill in a form that called for the following:
37 items of information! Because one of my cheques to SARS was banked in someone else’s account and they cannot find it (I have sent them a copy of the paid cheque) I cannot get a tax clearance certificate so I will not get paid by the parastatal. Thank goodness I do not have to put up with this nonsense. I will now be getting paid upfront before I do any work for the Government! If they do not like it they can go elsewhere and pay four times as much.