Once I found recording presentations worthwhile, I purchased a high quality Sennheiser digital lapel microphone which plugs into the lightning port of my iPhone. That produces a much better recording.
Question and answer session
I was asked two questions.
You are an expert on Islamic finance in the UK. Can you explain how the UK changed its tax law to enable Shariah compliant Islamic mortgages so that they got the same tax treatment as conventional (regular) mortgages?
Recording of my 4-minute answer
Assume that the Audit Committee makes a recommendation to the Board of Directors about the audit firm to appoint and how much to pay the firm. Suppose the full Board of Directors decides to reject the Audit Committee’s recommendation. I am aware that the UK Corporate Governance Code has a “Comply or explain principle.” Can you explain what happens in your experience in such circumstances?
During my answer I also explain the risk of letting management get involved with the process of appointing new non-executive directors.
Recording of my 5-minute answer
Related pages on my website
I recommend reading the pages listed below. They are listed with the most recent items first.
There are very specific reasons why auditing and corporate governance regularly go wrong. Fixing the problem requires making some radical changes. UKSA and ShareSoc have sent their joint views to the Government. This article summarises what needs to be done. It also explains how the response was written by seven co-authors, led by me.
The Government is undertaking a major review of corporate governance and auditing. This could lead to the biggest changes in this field for a generation. I gave a short talk to the CRSA forum with my perspective on the issues. I believe that the proposals do not go far enough. I recommend that power to appoint the auditor should be taken away from major companies and given to an independent regulator.
Companies protect their assets and the reliability of their accounts by having strong internal control systems. Such systems normally stop single individuals from stealing money or falsifying the accounts. Unfortunately, when senior management personnel collude, they can override any internal control system. I propose making auditors explicitly responsible for identifying such collusive management fraud. This will however cause audit costs to increase. My article originally published in "The Private Investor", the house magazine of the UK Shareholders' Association.
The UK has seen many recent audit failures. I have experience of auditing from both the auditor's perspective and the client's perspective. In my view the most fundamental problem is that companies choose their auditor. In practice, company managements have a major influence over auditor selection. The best solution is to take the power to appoint auditors away from companies.
Public company shareholders cannot run companies themselves, or even choose executive management. Instead, they require intermediaries in the form of non-executive directors. However there are structural weaknesses in our present corporate governance rules. Furthermore, in my view the most important reason for governance failure is not structural; it is human nature.
The Disqus comments facility below allows you to comment on this page. Please respect others when commenting.
You can login using any of your Twitter, Facebook, Google+ or Disqus identities.
Even if you are not registered on any of these, you can still post a comment.