AOA All
Nowadays SECP is too much active against Audit Firms (Usually Small firms) by penalising them.
I would like to ask whether it takes action against companies or not ? the answer will be "NO", why ??? can anybody justify it ?
Yes SECP must penalize Careless Auditors but it should also take actions against the companies as well.
In my opinion the SECP dont have the idea of "Audit", as it thinks that when auditor has signed the report, he is fully responsible for all matters of company, even he is also held responsible for the out of books transactions which are being discovered during the personal income tax assessments of the directors of the company.
what does the SECP do with the companies who get their reports qualified ? the answer will be "NOTHING"
i have gone through an audit report in which auditors have given qualification on investments made by the company as
"we were unable to verify the investments made by the company during the year amounting to Rs.xxxxxxxxxxxxxx (material figures),
there were two or three more qualifications in that report.
the above qualification shows that the management of the company has taken out the funds from the company.
in the above case the auditor fulfilled its responsiblity by expressing the qualified opinion, but what SECP did with the management of the company ?????? did it penalise it?
this is just one example, there are lot of examples.
but if an auditor shows negligence then it turns it Canon towards that small ghareeb auditor ? why ?
thats why every body has the opinion that SECP is just against the Chartered Accountants.
S M R
Hi Raza!
I am not aware of exact circumstances under which SECP took actions against these auditors, but one thing i would remind ourselves that an auditor has a fiduciary duty to investors of the company. He has represented himself as a professional who has specialized in a particular area. Therefore, he should be penalized for professional misconduct. Of course, the aggrieved C.A. has a recourse in the form of legal action against SECP.
I think auditors had a long free ride in our country alongwith others who made hay while sun was shinning. It is time we bring credibility to auditing function.
In very simple term, if there are two thieves in a locality, and police apprehends one of them, he cann't say 'Oh, but you are not going after the other one, why are u after me only' The society is better off if we have one less thief among us.
Bye the way, this situation is not different in other countries. If u know, Enron is still in existence in some form or shape (its energy trading department is fully functioning) but there is no more Arthur Anderson!
We should applaud good actions even if they are against our own interests. Shouldn't we?
Edited by - Pervez on Jul 17 2003 044138 AM
Edited by - Pervez on Jul 17 2003 044645 AM
Edited by - Pervez on Jul 17 2003 044930 AM
Edited by - Pervez on Jul 17 2003 045319 AM
Edited by - Pervez on Jul 17 2003 55541 PM
Hi Perverz and SMR
Pervez, i think that SMR was talking about this news item which i saw a few days back on this site.
http://http//www.accountancy.com.pk/news...newsid=329
Yes, the auditors have a fiduciary as well as a moral duty towards the shareholders and i believe that both SECP and SBP should have even more stringent policies towards the auditors to prevent an enron/worldcom style situation.
At the same time i would like the SECP to have a more effective system of monitoring for the companies on which it governs. In my opinion, an audit of financial statements becomes a complete farce when there is nobody to take any punitive action on the financial wrongdoings by a company's management. SECP should develop a grading system based on auditor's reports and the severity of the qualifiation. This requires a regular monitoring of the issued reports by SECP. It could be started first with listed companies and then spread to all companies registered under Companies Ordinance.
If i am not mistaken, there is some sort of similar mechanism being followed in the case of banks by SBP. Can somebody confirm this?
________________________
Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!
Yes, i agree with both of you,
but what does the SECP do with the companies, who get qualification in their reports. i know exactly the case of the company(as my cousin is the shareholder of that company) and if u r interested in knowing that company just email me i ll give u the reference of company.
i agree with both of you that SECP should protect the rights of minority shareholders, and i am not against that,(as i am also a shareholder) but i regret to say that SECP is not doing so, it is just against the Chartered Accountants, i dont know why ????
It should penalized the Company as well, Like one of you has quoted the example our Police,
let me rephrase the example,
Characters
Police = Auditors
Murderer = Company
Innocent Man = Minority Shareholders
Court = SECP
If Murderer has murdered an innocent man, and the police failed to catch him, the court on the other hand, have access to that murderer, and it can punish that person, but the court, instead of punishing that murderer, Penalizes the police for its negligence, then what will that murderer do ?????? He will definately find another innocent man to kill him, as he knows that whatever i do, the police will be responsible, and nobody is going to catch me,
i dont know, i have been able to explain the role of SECP or not, infact SECP is exactly doing the Same thing,
"THE SECP MUST RESOLVE THE BOARD OF DIRECTORS AND SHOULD NOMINATE ALL THE DIRECTOR ITSELF WITH THE CONCENT OF SHAREHOLDERS, AND REPLACE THE EXISTING MANANGEMENT BY CALLING EXTRAORDINARY GENERAL MEETING"
SECP is too much active after the cases of Eneron, but i would like to tell u all that the case like eneron can never be happened in Pakistan, where all companies hide their profits for tax evasion, can u name any company in pakistan, on which we can be suspicious that it must have shown false profits ????????????????
S M R
Hi Guy and Raza!
Thnks Guy for directing me to that article! I am happy we r in agreement with each other. I was wondering if this will degenerate into an insulting match as well. I hope not!
Now to the meat. By equating auditors with police, Raza has kicked them where it hurts most (u know what i mean!) Now in our situation, police knows full well who the murderer is (issues a good character certificate) and even might have advised how to murder, then should we not punish police as well as the murderer?
As far as SECP being equal to a court, this is their statutory role.
The laws of the land have mandated them to play this part. Whether they play it square and fair can be subject to debate and if necessary should be contested in the ordinary courts.
I think SECP is doing an excellent job within their limited resources(both financial as well as human). The ex-chairman Mr Mirza (who was on deputation from Int. Finance Corp. (same place that produced Moin Querishi) for two years has done a commendable job. The proof of it is in the pudding! The world is noticing Pakistan for some right reasons at last.
We shouldn't forget that SECP work with meager resources. Their major projects are done through grants from int. institutes.
We should also remember that it is a regulatory body and it does not frame the laws. Therefore, its effectiveness depends on political will to update the relevant laws.
Look even a country like US that has trillions of dollars in annual budget, cann't devote enough resources to avoid disasters like Enron/Worldcom. This is nature of this beast. Investing is a dangerous game. Let us hope SECP becomes a more robust and powerful institute than it is now. So it can catch both police and the murderer!
Take care!
Edited by - Pervez on Jul 18 2003 043032 AM
Edited by - Pervez on Jul 18 2003 044856 AM
Edited by - Pervez on Jul 18 2003 045109 AM
Thanx fo contribution, Pervez,
my question is still there, as far as the powers of SECP are concerned, it has more influence on Companies than auditors, then "why doesnt it penalise the Companies as well?" it is penalising the Auditors Only,
I am afraid of becoming an auditor, due to narrow thinking of SECP, We all may be from big firms, but when we are going to open a new firm then it will be counted as "Small Firm" (the main target of SECP)
Regards
S M R
Hi Raza!
I hope you are not an ICAP examiner, otherwise, you will have one standard comment on all answersheets "Since my question still remains unanswered, you(the student) should remain in dog house(CA firm) for rest of your life"(Pardon me if you don't find the punch line here, for it is an accountant's attemp to be funny.)
As for your being afraid of becoming an auditor. My advice to all my freinds (if they care to ask for it) is as follows
1. Know your stuff inside out.
2. Know the relevant laws like back of your hand.
3. Know your rights & obligations.
4. Then if somebody tries to take advantage of you, hunt them down
like a vicious dog.
Believe me you will go very far with this attitude.
Take care.
Pervez,
dont escape from the topic please,
S M R
what I can say is they are letting the big fish go and going after the small fish, becouse the big fish have bigger teeth which can hurt them.
The situation is like catching only person in whose house a thief has taken refuge, while letting the thief go
<BLOCKQUOTE id=quote><font size=1 face="Verdana" id=quote>quote<hr height=1 noshade id=quote>
AOA All
Nowadays SECP is too much active against Audit Firms (Usually Small firms) by penalising them.
I would like to ask whether it takes action against companies or not ? the answer will be "NO", why ??? can anybody justify it ?
Yes SECP must penalize Careless Auditors but it should also take actions against the companies as well.
In my opinion the SECP dont have the idea of "Audit", as it thinks that when auditor has signed the report, he is fully responsible for all matters of company, even he is also held responsible for the out of books transactions which are being discovered during the personal income tax assessments of the directors of the company.
what does the SECP do with the companies who get their reports qualified ? the answer will be "NOTHING"
i have gone through an audit report in which auditors have given qualification on investments made by the company as
"we were unable to verify the investments made by the company during the year amounting to Rs.xxxxxxxxxxxxxx (material figures),
there were two or three more qualifications in that report.
the above qualification shows that the management of the company has taken out the funds from the company.
in the above case the auditor fulfilled its responsiblity by expressing the qualified opinion, but what SECP did with the management of the company ?????? did it penalise it?
this is just one example, there are lot of examples.
but if an auditor shows negligence then it turns it Canon towards that small ghareeb auditor ? why ?
thats why every body has the opinion that SECP is just against the Chartered Accountants.
S M R
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana" size=2 id=quote>
Well I would say that we need our own Surbanes-Oxley Act. There were a lot of noise and uproar about corporate governance but we are yet to see a proper code of conduct for company executives
Hi CBP!
Do u really believe that enacting new laws is the solution to our problems? How about effective enforcement of existing laws? Would u kindly let us know what provisions of Sarbanes-Oxley when adopted for Pakistan will be useful in our enviornment? Remember we have a situation where law enforement is almost completely non existing. Don't u think we need to develop independent judiciary, strong administration and a sense of civic duty before adding volumes of laws?
Take care!
Edited by - Pervez on Aug 02 2003 032715 AM
Pervez note another Sitam Zarifee,
a week ago, i read in Business recorded about the companies who got the awards on their financial statments, regarding disclosures etc.
but if they failed to disclosed anything according to IAS or C.O.1984, then their AUDITORS will be receiving a letter (love letter) from SECP, (So called Pitta Jee of Minority Shareholders),
Yani Saza sirf Auditors ko, aur inaam Companies ko, why ?????????????
S M R
Yar Raza!
Please don't reveal ur firm's name on this site, otherwise,
SECP walley tumahare peechee per jaingee. I only say
ABTEDAY ISHQ HEY ROOTA HAI KAI, AAGE AAGE DHAIKIA HOTA HAI KAI!!!
Take care
<BLOCKQUOTE id=quote><font size=1 face="Verdana" id=quote>quote<hr height=1 noshade id=quote>
Yar Raza!
Please don't reveal ur firm's name on this site, otherwise,
SECP walley tumahare peechee per jaingee. I only say
ABTEDAY ISHQ HEY ROOTA HAI KAI, AAGE AAGE DHAIKIA HOTA HAI KAI!!!
Take care
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote></font id=quote><font face="Verdana" size=2 id=quote>
Dont worry Pervez, like Irfan Meer Said, the SECP will not take panga with the fishes having big teeth, it is only against the fishes having small teeth, so donth worry my firm has Bigger Teeth <img src=icon_smile_big.gif border=0 align=middle>
S M R