NDP call for a crackdown on corporate crime

[RedHot25]

http://www.ctv.ca/servlet/ArticleNew...4?hub=Politics

Federal New Democrats say big Canadian corporations should be forced by law to hire independent auditors to make sure investors have a true picture of their financial health.

...

The NDP is also wants to see stronger protection for corporate whistle-blowers, a beefed-up RCMP market investigation team and a federal securities regulator to oversee the existing provincial bodies.

[calculoso]

They sound pretty much like no-brainers to me. I wonder how many Canadian corporations don't hire independent auditors. I would have to guess that any that have international arms would already be doing that.

"federal securities regulator to oversee the existing provincial bodies" sounds a lot like government watching government though....

[simmer2]

Originally Posted by calculoso

They sound pretty much like no-brainers to me. I wonder how many Canadian corporations don't hire independent auditors. I would have to guess that any that have international arms would already be doing that.

"federal securities regulator to oversee the existing provincial bodies" sounds a lot like government watching government though....

Large Corporations almost all have audits done on them routinely. I know there is a full time staff of Deloitte and Touche here at Petro-Canada auditing us constantly. As well, with SOX (Sarbane-Oxley) accounting practices, Canadian corporations have to document nearly everything now. I'm not sure I completely understand NDP's request, because I think most corporations already have to have an audit. Maybe an accountant here can shed some light on the situation.

[RedHot25]

Originally Posted by simmer2

I'm not sure I completely understand NDP's request, because I think most corporations already have to have an audit. Maybe an accountant here can shed some light on the situation.

Well, I'm not an accountant or anything in the financial sector, but I would hazard to guess this going from the article:

The party's finance critic Judy Wasylycia-Leis says every G-8 country but Canada has introduced sweeping corporate accountability rules following the WorldCom and Enron scandals in the United States.

[calf]

Originally Posted by simmer2

Maybe an accountant here can shed some light on the situation.

I'm also trying to figure this out...independent audits are done for every single public company. Seems she wants accountability for companies that produce misleading financial statements...seems the $1 million fine paid by Nortel to the OSC is holding them accountable, though it would be nice if investors that suffered due to this would be compensated in some form.

Some of her recommendations:
- A Canada Securities Commission with national oversight to which all provincial securities would report;
Seems redundent...one should do

-Stricter accounting oversight and auditing of Canadian companies, including new demands for disclosure by Canadian executives;
-I'm curious about what sort of oversight...maybe some sort of accountability board that oversees the financial reporting process, and that the independent audits are being done properly? Oh wait, that was created in 2002 in response to the scandals she referenced...CPAB link

-Whistle blower protection for corporate employees and tougher rules governing corporate perks and disclosure.
I'm pretty sure Whistle Blower protection exists...tougher rules over governing corporate perks/disclosure seems fair (although a lot is disclosed at an upper management level), but is going to be really hard to enforce in other areas (ie, fraudulent/illegal perks)
-

[I-Hate-Hulse]

I work in this area and follow regulations regularly. There's nothing really new or revolutionary being proposed here by the NDP, and a few headscratchers...

Put simply, it's all there already, someone needs to pull the trigger.



(from http://www.ndp.ca/page/5332)

• Protecting Canadian Investors: advocate a “Canada Securities Commission” (a national oversight commission to which provincial securities would report; new accounting oversight committees and independent auditors; Canada’s executives would face new provisions for disclosure; independent board members should be truly independent)

A national securities regulator has been talked about forever and is long overdue. It's rather silly to have New Brunswick have it's own securities commission and require their approval on every single matter. Ever tried to get all the provinces to agree something? Might as well tackle Senate Reform.

Accounting Oversight - Psssst.....NDP. This has been done already.... it's called CPAB. Not sure why they don't know about this.

Independent Auditors - as Calculoso mentioned, all public companies have one already, and the rules on Auditor Independance as well as Board Independance have already been tightened recently under various CPAB regulations and National Instruments enacted. So no clue where the NDP is going on this one.

• Fighting for Canadian workers: the NDP will push for whistleblower protection; new rules for corporate perks and disclosure.

Public Companies by law are required to establish whistleblower programs already. Protection of whistleblowers is defiantely needed. The government would be a good place to start....

Ever pickup and read a management proxy mailed out to each and every shareholder of a public company? It'll say salary, bonuses, and other compensation on it for all officers. It'll also disclose all the shares/units that they own or have options for. This "disclosure" comment has a whole "workers of the world unite!" feel to it. The information is all there, but Joe Everyperson can't really decipher statements to get it.

• Policing the financial "Wild West": an increased and independent mandate for the RCMP Integrated Market Enforcement Team (IMET); bringing international standards to Canadian corporate accounting and law; new laws to prevent non-compete payments.

I've talked to a forensic accounting expert here in town - he figures IMET is a complete joke as for a while they didn't even have a presence in Calgary (or was it Western Canada?) due to a mat leave in 2006. So I'd say this is probably most valid part of the NDP's statement. International Accounting Standards (IAS) are on the way already 2009 or 2011. I'm sure the NDP would love to have this done sooner but it's an incredibly difficult undertaking.

I'm not sure if the NDP doesn't understand the issues or is just rearranging food on the plate. Although this the same party that once demanded corporations pay their Deferred Taxes (now Future Tax.....inside joke for accountants and finance types)

What they should have done is:

1) Demand the government be decisive on the issues already floating out there.

- Canadian equivalents to US legislation enacted after Enron have been languishing for close to 4 years now in various draft formats. Governments both Tory and Liberal refuse to take a stand and enact anything. Which brings us to the ridiculous situation of the lack of a federal securities regulator. None of the proposed legislation has been able to get by in by all the Provincial regulators. Abolish the provincial ones and go with a federal one, it really does make us look bush league on the world stage.

2) Institute harsher penalties

- Jail time is really the one thing that really scares the crap out of white collar crime. Given that, you'd never see the 40 year sentences handed out to Ebbers et al in the US here in Canada. I believe under Bill 198 it's a max of $5 million and/or 5 years in the slammer? Much like the rest of the justice system, the time does not fit the crime.

So the lesson? Crime doesn't pay.... unless it's white collar crime.

[calf]

Although this the same party that once demanded corporations pay their Deferred Taxes (now Future Tax.....inside joke for accountants and finance types)

i love that one!!