Social relationships may glitter like diamonds, but not all will last forever. And we need to accept that relationships that promise high benefits will also carry high costs.
IN our brief lives, we always look out for good company. Like butterflies, we constantly flutter in the air, gazing at flowers, and sometimes landing on a petal which gives us a good feeling like we’ve never had before.
Although rarely do we linger for long, deep inside we all secretly hope to find that perfect petal to rest upon forever till the end of our brief lives.
Sometimes, people want much more than a social contract.
They yearn for a closer social relationship, with greater social commitments.
They are willing to invest all their efforts and emotions on a single relationship.
It can revolve around family, friendship, work or even a political, religious or social organisation. Wel- come to the Social Company.
Finding the right petal is very much like starting the right business company. A company is formed by business people of similar business interests.
They become shareholders and partners, and they have rights and responsibilities against each other. Whilst a contract is used for a one-off transaction, a company is used to get down to serious business for the long haul.
When a company is riding the high tide of success, its members have every reason to grow in confidence of greater things to come.
Why fear for the future? When the party is rocking, everybody’s singing and dancing, and nobody cares too much about who’s cleaning up the pool and picking up the broken shards later on.
But sometimes it’s good to turn on the lights, and check that everything’s alright. When the party’s over, and it will be over, there’s a heavy hangover waiting the morning after.
Likewise, when a company collapses, and no company is too big to fail, its shareholders, creditors and employees are bound to suffer heavy losses. Think of Enron, Lehman Brothers and Kodak.
That’s the difference between a mere social contract, and a social company. In a breach of contract, only the parties involved will be busy squabbling with each other.
However, in a breakdown of a company, there’s collateral damage to various third parties.
Thus, as much as it’s important and cool to live the moment, it’s also important (though less cool) to occasionally stop to think, have a sobering reality check, and account for what’s been said and done.
Under the law, it is mandatory for a company to perform annual audits on their financial affairs.
Likewise, people should constantly review their deep social relationships, to make sure that their company doesn’t turn from good to bad.
A simple example of a social company is marriage. It’s about two people exchanging vows to stick together through good times and bad times.
Sadly, nowadays, many people fail to follow through such vows. Divorces may be hard on the innocent spouse, but it’s definitely devastating to the innocent children.
They are robbed from enjoying a normal childhood filled with love and affection, and sometimes, deprived from sufficient maintenance and educational support.
So before entering into a marriage, think hard about the serious commitments that come with it, and the catastrophic consequences that follow if the marriage falls apart.
Think about your future children. Think about your relatives who will be forced to take sides, and spilt into irreconcilable clans.
Problems may also arise during the courtship stage, prior to marriage. Many of us are guilty of being consumed by love, or at least what we perceive as love.
After all, two’s a company, three’s a crowd. It’s easy to manage a company of two, whilst letting the rest of our family and friends fall by the wayside.
We ignore their calls and advice. We tell them to mind their own business and get the hell out of our lives.
But the easy thing to do is not always the best. Someday, you will long for their company.
Being married to our career can also be taxing on our social lives.
We burn all our days and nights for the sake of levelling up our corporate status.
We console ourselves that it’s only momentarily, until comes harvest time when we can reap the fruits of our labour.
But there is truly no end to the cycle. By the time we eventually find the pot of gold at the end of the rainbow, chances are we are too old, too weak and too late to share our riches with our loved ones.
These are mere examples of the larger problem, which is putting one’s entire mind, heart and soul into a single social company.
The key is to be aware that every deep social relationship takes a toll on our other relationships.
Social relationships may glitter like diamonds, but not all will last forever.
And we need to accept that relationships that promise high benefits will also carry high costs.
Hence, we need to think deeply before we leap into any social company. If we cannot bear the high cost, then don’t.
But if we do, we need to be bold enough to back out from a social company once the cost spirals beyond what we can bear.
In our brief lives, someday our wings will turn brittle and our favourite flowers will wilt away.
Until that day comes, we should cherish the freedom of the skies.
Sometimes, we may flutter too closely to a pretty petal in a thicket of thorns, and get our wings clipped.
But even then, we should never fear to flutter away. For there will always be a bed of flowers below to catch our fall.
Putik Lada By Raphael Kok
> The writer is a young lawyer. Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my
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Showing posts with label Enron. Show all posts
Showing posts with label Enron. Show all posts
Thursday 4 October 2012
Wednesday 28 September 2011
Big Four auditors under pressure
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Big Four auditors under legal, EU pressure
Authorities considering rules to break them up!
By Dena Aubin and Huw Jones NEW YORK/LONDON | Wed Sep 28, 2011
The European Commission, according to a draft law seen by Reuters on Tuesday, is proposing that auditors be banned from providing consulting services to companies they audit, or even be banned altogether from consulting, a fast-growing business.
EU Internal Market Commissioner Michel Barnier is due to publish the draft in November, targeting what he sees as a conflict of interest when auditors check the books of the same companies from which they reap lucrative consultancy fees.
Leading potentially to break-ups, a ban on consulting would be the most punitive measure yet taken by regulators against the world's largest auditors -- Deloitte DLTE.UL, PwC PWC.UL, Ernst & Young ERNY.UL and KPMG KPMG.UL.
On another front, Deloitte was sued on Monday by a trust overseeing the bankruptcy of Taylor, Bean & Whitaker Mortgage Corp and one of its units claiming a combined $7.6 billion in damages. It is one of the largest lawsuits stemming from the 2007-2009 credit crisis.
Though auditors have been successful at winning dismissals of several crisis-related lawsuits, legal experts said some legal defences used by auditors in the past may have some holes when applied to the Deloitte case.
Deloitte has said the legal claims are "utterly without merit."
The Big Four review the financial books and records of most of the world's large corporations. The firms dodged a bullet during the era of the Enron and WorldCom frauds when U.S. regulators stopped short of an outright ban on consulting.
The 2002 Sarbanes-Oxley audit industry reform laws limited the types of consulting services that auditors can provide to companies they audit, but the post-Enron laws left auditors free to pursue one another's clients for consulting work.
STRICTER MEASURES
The EU has been considering stricter measures since auditors gave clean bills of health to many banks that suffered debilitating losses during the credit crunch.
Auditors, which are privately held, do not disclose their insurance coverage or reserves held for legal awards, though most have been able so far to absorb the legal penalties stemming from the financial crisis.
According to Audit Analytics, the Big Four auditors have been named as defendants in at least two dozen class action cases stemming from the credit crisis through July 2011.
"There is a point at which the reputational damage combined with large judgments can do significant damage to their operations," said Andrea Kim, partner at Diamond McCarthy law firm in Houston.
It is unlikely, however, that any of the Big Four firms would be allowed to fail, given their role in auditing most of the largest companies in key markets, she said.
MONEY-MAKING ENTERPRISE
"You can safely assume that before we reach that level, what you're more likely to see is some legislative action," she said.
Sarbanes-Oxley was enacted after the disastrous meltdown of Enron auditor Arthur Andersen, which had been the fifth of the Big Five audit firms. Sarbanes-Oxley actually helped the remaining four firms by creating more rigid requirements and auditing work for them.
"The biggest beneficiary of Sarbanes-Oxley was the Big Four," Kim said. "It's just a giant money-making enterprise."
The measure being considered in the European Union would be far more stringent. In addition to potentially forcing auditors to split off their consulting businesses, it might include a requirement that auditors be "rotated," or changed, every nine years, forcing them to give up some of their best clients.
Another element of the draft includes the introduction of "joint audits," so the Big Four would share auditing work with smaller rivals.
A ban on consulting would be especially damaging now, as the auditors have been furiously expanding their consulting business to offset slower growth in their core audit area.
"Breaking up the Big Four audit firms would make them more susceptible to be taken over by emerging Chinese firms," a UK audit official said on Tuesday on condition of anonymity due to the sensitivities involved.
Barnier's spokeswoman said he had made it clear that the audit sector displayed clear failings during the crisis, giving banks a clean bill of health just before they were rescued.
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