It gives me great pleasure to introduce BKR Walker Wayland (BKRWW) as our new alliance partner.  BKRWW is an independent member of BKR International, a global association of accounting and business advisory firms with 340 offices in 66 countries. 

Working closely with the BKRWW's Sydney office, InConsult will support BKRWW's growing clients with a range of risk management services and technology. 

In addition, InConsult will be developing a special 'multi-client' version of Guardian to help BKRWW deliver more efficient internal audit and external audit solution to their clients. Guardian's risk based audit and automated work paper capabilities will help BKRWW reduce audit administration cost to focus on the 'real audit issues'.

Overtime, the alliance will position both organisations as leaders in "integrated risk management, compliance and audit assurance services".

Enjoy this issue of InTouch.

Tony Harb

Director, InConsult

• According to a recent survey by Dunn & Bradstreet, the risk of corporate failure increases 5 times if any of the company's directors have a 'murky' legal background.  Also, if a director had previously served on the board of a failed company, the risk of the next venture failing doubles.

• As part of its 2005-2006 independence work program, the Financial Reporting Council (which oversees the accounting and auditing processes and monitors the effectiveness of auditor independence) will investigate the independence of auditors, how they teach ethics, whether a person can be an auditor without belonging to any professional body and the current system of penalising individual auditors, rather than the auditor's firm.

• According to a CPA survey, the three biggest areas of compliance costs are BAS reporting, tracking GST and OH&S.  Other areas of concern included employment legislation, licensing requirements and local council planning.

• In another 'red tape cost' survey by the NSW Chamber of Commerce, an average business faces spends up to 400 hours a year, or nearly $10,000 in time lost, on meeting legal obligations.

• 2 partners of mid-tier national accounting firm PKF have been banned by ASIC from acting as registered company auditors for 6 and 12 months and another partner has accepted an enforceable undertaking from ASIC following a review of their audit working papers.

• COSO, the Committee of Sponsoring Organizations of the Treadway Commission, released its proposed  "Guidance for Smaller Public Companies Reporting on Internal Control over Financial Reporting" to assist smaller public companies comply with Sarbanes-Oxley Section 404. 

• Major IT system problems have left thousands of cargo containers stranded and still in backlog at major terminals in Sydney,  Melbourne and Brisbane ports.  Australian Customs admitted to  implementing a flawed $200million cargo system despite concerns over its incomplete development , poor testing and businesses being ill-prepared for it.

• ACCC and the Commonwealth Director of Public Prosecutions have agreed to seek penalties of up to 2 years in jail where executives have misled an ACCC investigation or business owners and managers have deliberately defrauded consumers.

• US prosecutors expanded their probe of accounting fraud at the U.S. unit of Royal Ahold NV, the Dutch owner of supermarket chains and have charged 7  people from vendors for signing audit confirmation letters that enabled Ahold's U.S. Foodservice unit to overstate its earnings and assets..

• A KPMG survey of 80 major corporate in Australian and New Zealand has found that headline-hugging corporate collapses, multi-billion-dollar executive frauds and greater regulatory pressure  is "forcing" many organisations to reassess their risk appetite, management systems and controls.
  The survey confirmed that boards are increasingly embracing risk management as a "key component of effective corporate governance".

• AUSTRALIA has signed tax treaties with New Zealand and Bermuda in a move to help track money laundering and terrorist financing activities.

• A US grand jury has charged media tycoon Conrad  Black and three associates of misappropriating $US32M from Hollinger International, the company that operated his interests.  Black faces up to 40 years in jail.

• Increasing legal and regulatory risks means that legal counsels of Australia's top companies are now considered among the five highest-paid executives within their organisations, according to the Australian Financial Review.

• According to IASB chairman, a global set of international standards is being pursued, with a deal expected between the International Accounting Standards Board and the United States Financial Accounting Standards Board by the end of this year.  Don't hold your breath, whilst the target date in 2007, it may be as long as 2012 before differences can be sorted out.

• According to a recent survey by PWC, more than 60% of Australian businesses have reported fraud cases in the past 2 years.  The most common type of fraud was misappropriation of money or equipment.

• INSURANCE Australia Group (IAG) has received permission from the Malaysian regulator to enter into discussions to invest in AmAssurance Berhad, Malaysia's second largest motor insurer. Insurance Australia Group  is looking to take a 30% stake.

• The annual operating expenditure of APRA is forecast to have rise by 75% over the next five years due to more intensive supervision activities, a rebuilding of APRA's supervisory staff levels and an active program to upgrade the prudential framework.

• National Australia Bank intends to claim more than $539M in compensation from the world's largest interdealer broker, ICAP, after last year's rogue trading scandal.  The foreign exchange trading scandal, which cost NAB $326M.

• According to the JPMorgan Deloitte 2005 General Insurance Industry survey, Australian general insurers are unlikely to enjoy another year of record profits in 2005/06 as rising competition in every class of business across the sector pushes down premiums.

• Datamonitor Market Research predicts the Australian insurance market will reach a value of A$57.7B by 2009, an increase of 23.5% from 2004.

• The chairman of the UK based Financial Services Authority (FSA) has warned that sophisticated criminal gangs are "placing" their own agents inside leading British banks to commit large-scale frauds.  How?
  "They can increase their knowledge of organisations' systems and controls and thus learn how to circumvent them to commit their frauds."

• Swiss Reinsurance Co. will acquire GE Insurance Solutions for $6.8 billion.  The transaction will make it the world’s largest reinsurer.

• AXA Asia Pacific will enter the Malaysian life insurance market  buy acquiring the life insurance business of Tahan Insurance Malaysia Berhad for $44 million

• The Insurance Council of Australia (ICA) has warned that insurance premiums could increase after a report by the NSW parliamentary committee recommended another revamp of the state’s personal injury, workers’ compensation and motor accident laws, effectively reversing some of the 2001 government’s reforms to allow more accident victims to claim compensation.

WORKING TOGETHER

 Corporate Governance,

Compliance, Risk Management

and Internal Audit.

InConsult Pty Ltd · L12, 35 Pitt Street · Sydney NSW 2000
Tel: (+612) 9241 1344  · Fax: (+612) 9253 3001
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