On the Social and Political Role of Audit

Audit plays an important symbolic role in the economy and society. May sound odd, but one could speak of the social and political role of the auditing profession.

We are all used to the state having the central controlling function, meant to be on behalf of the society. But the more the society liberates itself from the state’s meddlesome “services”, the better. The state is per definition a bad and inefficient service provider, not only historically and in terms of its “corporate culture”, but also simply because of its scale: a small local enterprise will certainly be better able to concentrate on the demands of the local “small” ordinary people than a big universalized machine trying to fit all the interests of all the multiple different people at the same time. The same with the state: it has traditionally has the goal to be “everything for everyone”, grant welfare to all the people. But as a result it just wastes time, money and human resources; or is more often just an instrument of influence in the hands of certain immoral persons.

So, audit is exactly the instrument and hopefully only one of the first signs of how a society can take over the functions of the state. As far as not only the shareholders, but also the general public too, are users of the audited financial statements, here we see how a company builds its relations with the society. I don’t like the word “public control” as no one should control anything that is not his private property – and a private company is certainly anything but a “private property” of the public. But what we see here is exactly how a company communicates with the society and the society “has its eye” on the company without a slight participation of the archaic bureaucratic state in the process.

Of course, the bureaucrats are trying to put their fingers into auditing and establish their control there. Remember the stupid situation with the Russian authorities getting PwC to court for the audit of YUKOS.

At the end of the day, the auditing firm’s only real asset that allows it to do business is reputation. The auditor simply states that after having done some procedures it has the impression of the financial statements to be true and fair. Not more and not less then that, and whether to rely on the auditor’s statement or not – is up to the individual user of the financial statements. Of course one will be more likely to rely on them is the auditor is Deloitte or E&Y than if the statement comes from some unknown little audit company. But even if having trusted a brand – it’s always, always the user’s own risk and decision.

That’s how important audit is as a symbol of civil society’s self-regulation replacing the state. In some way it makes me proud to have worked in this noble profession, no matter how hard it was at some times and how much the work process itself has to be improved and will be improved as technology advances.
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"European Choice" As A Ticket to "Titanic"

A translation of my yesterday's post to http://www.pozirk.org/ by the guys from http://blogs.tol.org/belarus

The "European Choice" as a Ticket to the "Titanic"

It is more than popular in the democratic community now to talk about European standards and that Belarus should follow the European path, introduce “European reforms” to comply with “European Quality Standards”. No one explains what it is, being European, making a “European Choice”, but everyone for sure knows that it is something attractive, sweet, warm, and tasty. Chruschov promised every family to have a flat and live in communizm by 1980. Like this, lots of naive people in Belarus suppose that Belarus should join the EU by ANY means, and the effect of this accession will be close to that of getting into comunizm waters.

Therefore when I read those calls to come to European March, I simply don’t know what to feel or think. Please don’t misinterpret me: we should go there - but for a different reason.

Calls for eurointegration resemble calls to provide everyone with free meet for the rest of their lives: here is an example of a typical logic employed today:

"Belarusian pension is something you can only cry on, not live on. Like an elderly lady who had worked all her life like an accountant asks why a German accountant who had worked at the same job, with the same responsibilities (but only in Germany) gets 600 EUR pension and can travel on that. Whereas she gets only 150 USD. They both worked the same time, with the same effort, but the Belarusian lady can survive only with her sons help, whereas the German Frau can travel around Europe. This cry shows all! The lady wants to live in Europe, get European pension for a European work . And the only thing that barrs her from that is that she lives outside Europe. Just a bit outside… "

So, what are we being offered now? That Europe is a magic key to all our problems. Should it come - and our life will turn into heavenly succession of problemless days. But it is never immediate. The German and the Belarusian accountants did DIFFERENT things as they worked for different economies. The Soviet woman worked for an ineffective socialist economy which was destined to die, sooner or later. This is the real tragedy, and not only of that lady in question, but of millions of people who wasted their effort to do useless work for a useless system. C’est la vie.

Democratization and europezation won’t GIVE people their long-wished well-being: they will ALLOW them to EARN it through hard work. It is difficult to fight agains Lukashist populizm without being a populist yourself, but democratic populism still remains demagogy, from whatever side it comes. Or may be Belarusian nation can not accept more complicated arguments?

No one asks a question how long European heaven will hold and what will it bring us. We just hear a “hardtalk” which all the time finishes in a conclusion that “we should move to Europe coz we are Europeans”, and that “when we join the EU, we will start earning like the Europeans”.

However, eventual accession of Belarus to the European Union brings lots of negative things as well. Bureaucratic apparatus created by Brussels weighs so much that the “old Europe” economy almost does not grow. This is the reality where shops are forbidden to work after 7 and where tax pressure exceeds 50% on average. These tax money are further redirected into such welfares when unemployed people get subsidies reaching an average salary in their country. They are also transferred into salaries of bureaucrats in Brussels. Salaries which are more than high.

This is a real social union. And social union (or state) is inflation plus unemployment, and that exactly what we see in the EU case. If it had been limited by just some states - one could carry that, but such standards are being imposed on all new members. Say, Estonia had to stop its several liberal trade programs and even increased import tax for some non-EU goods just because membership conditions required that.

European socioeconomic model does not simply deeffectize economy, but turns some categories of people into parasites (in a milder form than in social economies, but they still think that the state should take care of them in difficult situations).

And this is the main thing that immigrants living on subsidies in their ghettos learn about European life. And what is the awfulest thing here - that those people living on subsidies are RATIONAL in their behaviour: “Why should I care when the state will take care about me. Why should I work when the industrious pay half of their income to support such lazybones like me?”

// Source

Actually, there was also a second part of the post published today, hopefully they will translate it as well

UPD here it is:

Talented people were usually leaving Europe for America and Canada, and had been doing that till the very recent days. Entrepreneurs could realize their ambitions much easier in more liberal United States, Australia, or Canada, than in socialist Europe. Just recall Arnold Schwarzenegger who quitted his European Austria for the US dream.

Demographically Europe is dying, and after 50 years is going to turn into one big house for elderly people. That concerns not just the age, but also dinamism, innovativeness, proactiveness of position. Even now Western Europeans are the people who need nothing else from the world but to have their social guarantees and a croissant in the morning. They are sure the state will take care of them. And as a result, European culture is retreating under a passionate influence of active immigrants from Turkey, Africa or the Middle East.

Economically, countries of South-Eastern Asia together with the USA, Brasilia, India, and China are going to dominate in the world of the 21st century. Ok, adding up Russia whose oil influence will not decrease until Chinese economy is growing. The EU has no strategy for development, and has no clear view for the next 10 years. This might end in one of the 2 variants; either acceptance of liberal values and imminent economic and political increase, or a crisis with a post-acception of liberal values. Now Europe walks more the second way.


Once having joined the EU, there will be no way back. Accession to the Union means loss of state sovereignty. Once and forever. And this is not just about national honour, but about a simple ability to act as you want without a repressive influence of the social bureaucratic EU machine from outside. The machine which has no idea of what is going within. The Union is bound to centralize more as time passes, with local and national powers being left just with current-day questions to solve. As a small country, Belarus will have no weight inside the EU. And when joining, the EU will centralized more than ever.

Do we want Belarus to become part of such construction? After mere 15 years of independence to have come after 300 years of historical absence, do we really want to become pensioneers of this world?

There is a sence for Belarus to become a part of NATO. Accession to this organization will mean a guarantee for us that we are not going to assaulted again; this is a sign of democratic, choice in favour of freedom, democracy, and progress. A guarantee that not a single Eurasian empire will take our country out of that.

We need a non-visa and free-trade regime with the EU - exactly like with the other neighbors and in general with as many countries - as possible. But by no means we need to hang ourselves on the chain of eurobureaucrats, which depend on those social regime, and by no means we need to abandon our state sovereignty.

We should say NO to fetishization of the EU; we don’t have to behave like Georgia or Albania begging to accept us into the European family: we ARE Europeans. We should aim not at the EU accession, but at building a market competitive economy which would allow all people to earn decently and live with honour, which is based on democratic principles. Eurointegration might be a means on that way, but not an objective in itself.

There is only one valid argument in favour of European choice which can cross all arguments against. Pragmatic reality often dictates the choice which is far from the desired one. After years of anti-NATO ideology and in the wake of the fact of the NATO allergy people have now, the only option against new integration into an “Axis of Freedom” of some Eurasian dictators or into some new formation of the CIS which strengthened revanchist Russia will start assembling is a socialist, but at least democratic UE.

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