External auditors where got so much time? Time spent at customer company 90% accounting 10% audit. Somemore, do a few companies concurrently.
I rather use 50% audit fee for reward for whistle blowing. Most commercial crimes from tip-off rather than catch by police. Hahah.
^^ Alternatively I always believe auditors and credit agencies should be appointed by 3rd party like SIC or SGX and the company reimburse the costs. It may not LOOK consequential but the reality is that people listen to the hand that feeds them ie the paymaster. In this case the 3rd party will have control.
Whistle blowing is good but the incentive structure have to be framed properly. Otherwise effectiveness of companies will be compromised in a "Khmer Rouge" culture of fearing who will backstab who
Quote:It may not LOOK consequential but the reality is that people listen to the hand that feeds them ie the paymaster. In this case the 3rd party will have control.
Ha! Ha!
It is a proven thing:- The Paymaster Calls The Tune.
Extract:
From Michael Lewis - On sub-prime loan CDO bonds.
"The pretense that these loans were not all essentially the same, doomed to default en masse the moment house prices stopped rising, had justified by Moody's and S&P to bestow AAA ratings on roughly 80 % of every CDO. (And made the entire CDO business possible.) Morgan Stanley had done as much as any Wall street firm to persuade the rating agencies to treat the consumer loans as they treated the corporate ones--as assets whose risks could be dramatically reduced if bundled together. The people who has done the persuading saw it as a sales job: They knew there is a difference between corporate and consumer loans that rating agencies had failed to grapple with. The difference was that there was very little history to work with in the sub-prime mortgage bond market, and no history at all of a collapsing national real estate market. Morgan Stanley's elite bond traders did not spend a lot of time worrying about this. Howie Hubler (M. S. CDO bond's chief trader) trusted the ratings.
NB:
So without the "persuaded" credit agencies participation 2008/2009 Sub-Prime loan- CDO Bond fiasco would not have happen. U must always remember "The Paymaster Calls The Tune."
MAS, SGX and SIAS can be effective in all this. Especially in appt of IFAs.
MAS should use its windfall from SGX demutualisation to fund this. Rather than wasted money on sponsoring research
into small caps.
An alternative to SIAS should be formed by minority investors (which covers everyone in one way or another...hahaha).
e.g.
http://www.mswg.org.my/web/
Sometimes, I feel that SIAS dont have much street credibility and a bit chummy with the stockbroking industry.