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Just spitballing, but public companies could pay a small tax in lieu of paying an auditing firm, and the auditing could be done by government-employed accountan
by cultus 6y ago
Just spitballing, but public companies could pay a small tax in lieu of paying an auditing firm, and the auditing could be done by government-employed accountants who are beholden to the public interest. Of course this would never happen because it would destroy the politically-powerful auditing firms.
- dnautics 6y agoWe already do this. The expensive auditors exist to wrangle the complex organization of multinationals into a digestible form so that they can be pushed through the compliance processes of the government employed accountants more efficiently.
- cultus 6y agoThe auditors are doing by far the bulk of the work, with the government essentially just signing off on it. This has directly lead to scandals such as Enron and possibly Wirecard.
- dnautics 6y agoYes. I don't know what you're expecting under a "small tax" burden. Did you want that tax burden to be 10x? Besides companies are still going to want to buy their own accounting services to avoid the hassle and cost of resubmission, or penalty (if you're going with an early-punitive measure). If your goal is to increase the power of the accountancy industrial complex I suppose your strategy is a good one.
- zepearl 6y agoInteresting, but I would personally like to leave the government out of this (let's not introduce deeper/political conflicts of interests). What about just standardizing the fees charged for audits and doing a fixed rotation (rotate e.g. once every 4 years) of assignments of auditing companies to clients (companies being audited)? This way on one hand the conflict of interest by paying megabucks to auditing firms (to get a positive audit outcome) would vanish (as the fees would be fixed), on the other hand a auditing companies would lose the tendency to try to stick to a particular client (by providing positive audit outcome).
- baq 6y agoOr we could disentangle government from regulator. The market needs rules and enforcement, maybe the government could pay a private regulator to some of that.
- TT3351 6y agoThe government can at least ideally be replaced/restructured popularly when it gets its hands dirty with conflicts of interest. The redress for private corruption is much less powerful. I don't understand why it's so often taken as a truism that somehow introducing privatization or profit motive will improve a given problem; I would have hoped by now the numerous flaws in that approach would be apparent.
- zodiac 6y agoHow do I sign up to be an auditing firm?
- smabie 6y agoThis is like, how the system works right now...
- cultus 6y agoNo it's not. Public firms are audited by public accounting companies such as E&Y.
- JumpCrisscross 6y ago> public companies could pay a small tax in lieu of paying an auditing firm, and the auditing could be done by government-employed accountants who are beholden to the public interest Oh man, I am starting an accounting firm if this gets traction. Not only will the government-employed auditors get paid, but companies wanting to avoid embarrassing findings will pay for pre-audits. Then, when the right administration comes in, the government audits will be outsourced.