Some business jib jabs
Apr. 27th, 2005 01:38 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksAn interesting thing happened yesterday in the business world. PricewaterhouseCoopers refused to "sign off" the 2004 accounts of AIG. Their reasoning was simple. Under the new Sarbanes-Oxley laws in the US, and in the midst of Equitable Life sueing Ernst & Young "for not telling us that our company was in the shit", PwC have concluded that they would rather not go the way of Arthur Anderson, thank you very much.
The new laws in the US make the auditor potentially liable if it signs off accounts that later turn out to be incorrect. This legislation is a classic example of a knee-jerk reaction (to the bankruptcies of Enron and WorldCom and the fraud at Tyco) that creates more problems than it solves. And PwC (good on 'em) has put its head above the parapet.
You see, the problem with AIG's financial position is that it is so complicated that the true situation might not become clear for months, or even years. Since PwC can therefore say, quite honestly, that it cannot know AIG's real financial state, it cannot sign off on the figures. This means that AIG, one of the biggest companies in the US, cannot publish audited figures. Which, basically, brings the investment system in the US to some kind of crushing halt. And all because of legislators and lawyers.
---
An interesting follow-up to the Phoenix affair. Apart from cheap cars being available at www.phoenix-cars.com (proprieter, one of the Phoenix 4) we also have the spectacle of Sir Digby Jones, head of the CBI, calling the behaviour of the Phoenix 4 "appalling". Now, it's bad enough when that kind of vitriol comes from Denis Skinner. But when the head of the Confederation Of British Industry joins in, you must surely know that you have overstepped the mark.
----
It's election day next Thursday, and I have found out where I am going to vote. It's the Territorial Army Centre on Blackheath. This bereft building smack in the middle of nowhere has presumably been chosen with the explicit aim of achieving the lowest turnout in an urban polling office throughout the country. No bus stops nearby, and it's at the top of the hill. There are no residences within 200 yards. It's the kind of place that you can imagine being a polling office in Royston Vasey.
-----
Ulliott was on the Channel 5 poker a couple of nights ago. After he had come second to a Belfast player called Alex, who called an Ulliott raise with Q8, and promptly won, Ulliott said "a good player would have passed that Q8". What he means, of course, is that in the past, most players would have passed the Q8, which is why Ulliott has won so many tournaments. This time he got called. And, what will happen the next time Ulliott is in a similar position against the same player? How much more careful will he be with his raise? Quite a lot, I should think.
I found another marvellous quote from GPG's book. "Congratulations. Your calling days are over". Yes, they do write that.
When will these professionals realise that the last hand you play in a tournament is not the last hand you will play in all tournaments? People with a reputation for "I will call you if I think I am getting pot odds" will have reversed the situation on the old-style stealers. Because the stealers will now look for other victims, along the lines of burglars choosing easier houses to break into. Thus the guys with the "calling" reputation will be bluffed less, and they can fold more often in return.
Once again Fox's book and his theory of saddle points comes to the rescue. Every time I sit down some amateur who thinks he's a pro tells me that he will defend his blind vigorously -- which lasts precisely until I go all-in, and they then fold.
And Q8 heads up? It's a monster. Against Ulliott, it's a double-headed monster.
The new laws in the US make the auditor potentially liable if it signs off accounts that later turn out to be incorrect. This legislation is a classic example of a knee-jerk reaction (to the bankruptcies of Enron and WorldCom and the fraud at Tyco) that creates more problems than it solves. And PwC (good on 'em) has put its head above the parapet.
You see, the problem with AIG's financial position is that it is so complicated that the true situation might not become clear for months, or even years. Since PwC can therefore say, quite honestly, that it cannot know AIG's real financial state, it cannot sign off on the figures. This means that AIG, one of the biggest companies in the US, cannot publish audited figures. Which, basically, brings the investment system in the US to some kind of crushing halt. And all because of legislators and lawyers.
---
An interesting follow-up to the Phoenix affair. Apart from cheap cars being available at www.phoenix-cars.com (proprieter, one of the Phoenix 4) we also have the spectacle of Sir Digby Jones, head of the CBI, calling the behaviour of the Phoenix 4 "appalling". Now, it's bad enough when that kind of vitriol comes from Denis Skinner. But when the head of the Confederation Of British Industry joins in, you must surely know that you have overstepped the mark.
----
It's election day next Thursday, and I have found out where I am going to vote. It's the Territorial Army Centre on Blackheath. This bereft building smack in the middle of nowhere has presumably been chosen with the explicit aim of achieving the lowest turnout in an urban polling office throughout the country. No bus stops nearby, and it's at the top of the hill. There are no residences within 200 yards. It's the kind of place that you can imagine being a polling office in Royston Vasey.
-----
Ulliott was on the Channel 5 poker a couple of nights ago. After he had come second to a Belfast player called Alex, who called an Ulliott raise with Q8, and promptly won, Ulliott said "a good player would have passed that Q8". What he means, of course, is that in the past, most players would have passed the Q8, which is why Ulliott has won so many tournaments. This time he got called. And, what will happen the next time Ulliott is in a similar position against the same player? How much more careful will he be with his raise? Quite a lot, I should think.
I found another marvellous quote from GPG's book. "Congratulations. Your calling days are over". Yes, they do write that.
When will these professionals realise that the last hand you play in a tournament is not the last hand you will play in all tournaments? People with a reputation for "I will call you if I think I am getting pot odds" will have reversed the situation on the old-style stealers. Because the stealers will now look for other victims, along the lines of burglars choosing easier houses to break into. Thus the guys with the "calling" reputation will be bluffed less, and they can fold more often in return.
Once again Fox's book and his theory of saddle points comes to the rescue. Every time I sit down some amateur who thinks he's a pro tells me that he will defend his blind vigorously -- which lasts precisely until I go all-in, and they then fold.
And Q8 heads up? It's a monster. Against Ulliott, it's a double-headed monster.
Geoff C - Accounts & Elections
Date: 2005-04-28 11:44 am (UTC)The Eq Life lawsuit is very relevant to the future of auditing. This is one of the world's worse professions, that is principally concerned with making money by having regulations that companies must comply with, without the companies gaining any real benefit. Fraudulent accounts can be cooked up fairly easily and are unlikely to be caught by modern auditors. If external auditors are there to protect the shareholders from the mendacity of the directors then they're unlikely to succeed.
Eq Life are now trying to say "we made a balls-up here and it's all your fault because you didn't spot it." I think Eq Life will probably win if it can be shown from Ernst & Young's papers that they were aware of any different opinions on Eq Life's accounts. But they are not responsible for the subsequent fall-out. Just because E&Y didn't do a great job should mean they get their audit fees for the work refunded, not that E&Y should be responsible for the whole of the £2B or whatever they are claiming.
I saw the Devilfish episode too (not been sleeping well). What made his grouse all the more unpalatable was that a few hands before he had been the winner of a hand where his opponent was ahead all the way and Ulliott, who should have folded, lucked out on the river. I would have thought one of the pre-requisites of being a long-term pro poker player was being philosophical about things, but then maybe it was all artificial grumpiness for the sake of the cameras.
For John W's info, I am sure he could have wangled a postal vote out of Nottingham by going on the electoral roll here. Not that a LibDem vote in urban Nottingham will achieve a great deal. And as for Palfers not being able to vote - I can't seriously think there is a political party in Britain that would have suited his views. Is there a social-liberal Libertarian party out there anywhere?
Re: Elections
Date: 2005-04-28 12:50 pm (UTC)-- Jonathan, near Barcelona
Re: Geoff C - Accounts & Elections
Date: 2005-04-28 03:24 pm (UTC)(a) I don't think Equitable Life will win, but your analysis of their case is spot on.
(b) I think that PwC are doing the right thing rather than wimping out or being cowardly. But, knowing (most) accountants, it's quite possible that your analysis is more correct.
Re: Geoff C - Accounts & Elections
Date: 2005-04-28 08:12 pm (UTC)Mind you, no-one would lend you a screwdriver based on qualified audit certs.