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Auditors Have Failed the Small Investor
10-23-2002, 05:58 PM
Post: #1
Auditors Have Failed the Small Investor
Hundreds of companies were listed on the stock exchanges in Pakistan during the 1990's. It is common knowledge that a very large number of sponsors of such companies indulged in over-invoicing of construction costs, plant and equipment and siphoned off money. Additionally, hundreds of listed companies continue to keep profits off their books through purchases and sales recorded at other than true market value; including foreign companies indulging in transfer pricing. I have yet to see any audit report disclosing doubts as to the accuracy of the accounts. How come its common knowledge but auditors pretend to be oblivious? It’s no point hiding behind words and explanations and not doing right by the small shareholder who depends entirely on the auditor's professional integrity.<b></b>
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10-23-2002, 08:47 PM
Post: #2
 
Vested interests my dear Nasim ... its all a game of vested interests!

The government keeps its mouths shut to keep the investment coming in the country. The Auditors do it to hold on to their clients.

Now no audit firm would like their clients to kick them out for investigating something as ignorable as over-invoicing, siphoning off of funds transfer procing... would they? <img src=icon_smile.gif border=0 align=middle>
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10-24-2002, 11:21 AM
Post: #3
 
Nasim... u seem to have been bitten pretty badly by some of these companies... is that why u seem to have such a grudge?
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10-24-2002, 04:30 PM
Post: #4
 
<BLOCKQUOTE id=quote><font size=1 face="Verdana" id=quote>quote<hr height=1 noshade id=quote>
Nasim... u seem to have been bitten pretty badly by some of these companies... is that why u seem to have such a grudge?

<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana" size=2 id=quote>
Skimpy, nice name!! I am a fund manager and keep away from dubious sponsors but was for a few years involved with trying to turn around NIT which had been bitten very badly by some terrible companies, which were not fit to use public (small investors) money. Regrettably, the auditors participated in the crime.
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10-24-2002, 11:44 PM
Post: #5
 
hey nasim.... dont take it too personally. I didnt give da last statement to hurt anybody's feelings. We r all on the same side!

So were u able to make any difference at NIT or as they say... lost da battle against overwhelming odds? <img src=icon_smile_blackeye.gif border=0 align=middle><img src=icon_smile_blackeye.gif border=0 align=middle>

and btw... who were the auditors of NIT at that time? U seem to have made quite a serious allegation that the auditors too were partners in crime. ICAP should look into this malpractice claim.
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10-25-2002, 12:58 AM
Post: #6
 
The problem is with thesystem which the government is rightly trying to fix through different reporting requirements like code of corporate governance.

The Government don't want to discourage investment which is a rare commodity for Pakistan but they should balance it through regulations and incentives

The auditors hide behind "true and fair view" They should be made to report on operational activities as well in their report.
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10-25-2002, 05:03 AM
Post: #7
 
<BLOCKQUOTE id=quote><font size=1 face="Verdana" id=quote>quote<hr height=1 noshade id=quote>
hey nasim.... dont take it too personally. I didnt give da last statement to hurt anybody's feelings. We r all on the same side!

So were u able to make any difference at NIT or as they say... lost da battle against overwhelming odds? <img src=icon_smile_blackeye.gif border=0 align=middle><img src=icon_smile_blackeye.gif border=0 align=middle>

and btw... who were the auditors of NIT at that time? U seem to have made quite a serious allegation that the auditors too were partners in crime. ICAP should look into this malpractice claim.

Skimpy, not taken personally at all, was simply trying to put across the background. Is not the auditors of NIT but the auditors of hundreds of companies in which NIT was invested where the siphoning off took place but yes, these are serious allegations which I stand by. As regards making a difference at NIT, did manage to put some pressure on some of the delinquent managements and arm twisted them into buying back the shares at a reasonably decent price.

<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana" size=2 id=quote>
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10-25-2002, 07:20 AM
Post: #8
 
Meri bhi Sunye


I think corporate culture in pakistan failed because of the following reasons.

1) Sethiya Approach (I know the best how to run this business)
2) Sethiya Approach (thinking that paisa can do everything)
3) Sethiya Approach (short-term profit taking)
4) Sethiya Approach (not respecting your staff)
5) Sethiya Approach (no need to care for small sharehodlers)
6) Sethiya Approach (Chartered Accountant is a machine to save taxes)

apart from this I think there are some other minor reason associated with government, but still they are not the main reasons.

The main reason is only this Sethiya Approach





Edited by - Zaibi Solangi on 25 Oct 2002 022229 AM
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10-31-2002, 05:27 AM
Post: #9
 
Dear beg,

Who dare to come forward, even you have not mentioned a single example to support your general statement

This is not a matter only for 1990s this is an ongoing corruption.

Iqbal Abid

iqbalabid
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10-31-2002, 05:33 AM
Post: #10
 
you people think that government can fix this corruption, I bet this can never be,this corruption is not only in small companies or large,IS HAMMAM MAIN SUB NANGAY HAIN, please try to understand the culture and society we have now, do you think we can make collective effort to smook out the corrupts and corruption, you will be smooked yourself. so be careful and honest with yourself.

May ALLah save our country.

iqbalabid
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10-31-2002, 02:46 PM
Post: #11
 
<BLOCKQUOTE id=quote><font size=1 face="Verdana" id=quote>quote<hr height=1 noshade id=quote>
Dear beg,

Who dare to come forward, even you have not mentioned a single example to support your general statement

This is not a matter only for 1990s this is an ongoing corruption.

Iqbal Abid

iqbalabid
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana" size=2 id=quote>
Dear Mr Abid
The firms that had the opportunity to audit the companies reputedly involved in such corruption had the opportunity to discover the fraud. I from the outside cannot quote examples without access to the companies’ records and market information on the then prices but if the general perception in the market is that such corruption took place (and indeed continues) it is incumbent upon the auditors to investigate into the matter before giving a clean opinion on the accounts. Auditors must make it their business to be aware of true prices of all material purchases and sales of their clients. They cannot pretend that their duty ends at inspecting the invoices produced to them by their clients. They can also look at the tax assessments of some of the multinational pharmaceutical companies - they will discover that there have been additions to the taxable income on account of transfer pricing - half their work is already done by them by the ITO.
Nasim Beg
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11-26-2002, 05:00 PM
Post: #12
 
This is reference to Mr. Nasim Beg's remarks about the accountancy/auditing profession in Pakistan.While i whole heartedly agree with him that auditors have not discharged their statutory functions efficaciously,it is also pertinent to point out that members of the Accountancy bodies themselves have not played a proactive role is putting their own "house in order".A country where a fine for professional negiligence stood at Rs 2000 can hardly afford to talk about international best practices in financial reporting/auditing. The Institutes have completely failed to discharge their role as Self Regulatory Organizations and hardly one auditors/accountant has ever been found guilty of professional negligence.

When SRO's can devise,suspend and terminate their own "exemption policies" based on a partners or generals siblings enrollment preferences, the less said about the quality of audit the better.(instance ICAP's exemption policies to ACCA/CIMA students)

Finally, corruption both financial and moral, is endemic in the country and the auditing profession has been no exception in this regard.
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08-20-2003, 04:28 AM
Post: #13
 
Now the situation is changed, as all the old members can see the applicability of Code of Corporate Governance,
but one thing i would like mention, have anyone been to AGM of any company, I have been (as auditor), if you look at the behaviours of shareholders, fighting for One cold drink, i sometimes think, that for these shareholders, we qualify the reports???? for them we fight with the management of the company for appropriate disclosures, even sometimes we lost the client, even if we qulify the report, then what action SECP takes against those culprit companies??????????? Nothing,
so bhai jan,
in pakistan the auditors are of that thinking, that if we are safe, then let the company whatever she wants to do. <img src=icon_smile.gif border=0 align=middle>

S M R
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