Forum Archive Index - October 2002

["Hunter, Murray (Packaging Head Office)" <Murray.Hunter@chh.co.nz>]

>From Murray Hunter 37 Amy St, Ellerslie, Auckland.  5715540, 5253967 021
397064  

Is this the last straw? After 50 years, Steel & Tube is putting its audit
out for tender to cut costs. ( Business Herald Thurs 24 Oct page C3)  This
company held out longer than any company I know, with many using the tender
method for over twenty years. It led to Audit companies tendering a low
price as a loss leader just to get access to that company's lucrative
consulting needs. They then cut the audit to meet the price and in some
cases ceased transactional audits, perhaps solely relying on a "check" of
the Balance Sheet. 

Interestingly, immediately above the Steel & Tube Audit announcement is an
article stating " Accountants will operate under a stricter ethical regime".
Such diverse headlines do not compute.  Price or quality; not both! 

I am sure the Tender phenomenon, coupled with executive options inflated by
declared earnings, led to the Enron type disaster. How can it be responsible
to Shareholders to risk erroneous reporting by tendering the audit?  Who
then is the Shareholders watchdog? 

There must be some way for the Govt to impose a minimum quality of audits to
protect shareholders. We recently saw the disaster of leaving Trans Rail to
self monitor its maintenance needs. Don't leave Commerce to go down the same
track. We deserve better!



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