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    NevOn is the archive weblog of Neville Hobson, a British business communicator based in Amsterdam, The Netherlands, a record of commentary and conversations from December 2002 until 22 February 2006. This site is no longer updated - please visit www.nevillehobson.com.
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« Biz-Tech-News: Headlines 11-Oct-05 | Main | Speaking at E-Day Amsterdam »

11 October 2005

Comments

dahowlett

Blimey Neville - FT only just caught up with this? I did a dissection of Interpublic back in...err...May/June - the picture is much worse once you pull the accounts apart of its US parent and certain of it UK subs. This is a management that has repeated the same story (with slight variations) for three years, but has never taken responsibility for a failure to perform.

The Turkey thing seems dubious. Are they trying to convince us that lil'ol Turkey is largely responsible for fraud? Is that their excuse for poor management attention? What about the auditors in all this? If it is a one country affair it must have stuck out like a sore thumb.

But maybe not. They couldn't verify sales. As a result they didn't know for sure how much they are owed and all the while money was going out the business.

Sometimes, 20/20 hindsight gives a fuzzy picture. This one remains fuzzy...

Nevon

Clearly I missed it in June, Dennis. The FT story appeared on October 10, a week ago.

You need to read the complete FT article to get the whole sense of how the FT has analyzed the issues at Interpublic. But I think the summary extracts I've included in my post do provide a good sense of those issues.

Plus, I was more interested in looking at lessons than furthering any debate on the rights or wrongs of what went on at Interpublic in previous years.

Judy Gombita

The full Financial Times article is reproduced in today's (Wednesday, October 12) Financial Post section (page FP7) of the National Post (www.nationalpost.com). It is only available in the print edition.

It is worth noting that US GAAP applies "rules-based" accounting, whereas the GAAP and GAAS of many other countries is "principles based." That is one of the challenges of a multi-national with offices in the USA and several other countries/and listed on American stock exchanges (and thus required to report according to SOX rules).

For the record, the International Accounting Standards Board (based in London, England) sets GAAP internationally. It is further along the principles-based continuum than US GAAP. The same could be said about international GAAS, which is set by the International Auditing and Assurance Standards Board of the International Federation of Accountants (IFAC).

dahowlett

One of the great benefits of this medium is the right of reply. This is a tale of how the FT's reporting is less than incisive and, in my opinion, of dubious value.

Before scribbling this, I did a bit more fact checking to ensure I was correct. So...

The FT article said: "Mr Roth has been installed more recently to help resolve the mess."

Interpublic's website says: "He added the CEO title in January of 2005. Prior to becoming Chairman, in July 2004, Roth had been a member of Interpublic's Board since 2002."

The accounting mess really caught attention in 2002-3 but actually goes back to 2000. Roth was there then. So what was he doing? Surely he didn't join the Board of Directors without some understanding of the problems? He's a qualified accountant. He was drawing remuneration for his position. Why is he still there? In comment to the following FT statement: "They were also pulling out of Azerbaijan, Ukraine, Uzbekistan, Bulgaria and Kazakhstan."

Roth says: "I never heard of these countries until I found out that I had problems in them," Mr Roth jokes. "So now we don't have them any more - or we won't."

Uzbekistan is next door to Afghanistan - Roth must have heard of that place?

Mr Roth may find these things amusing (as reported by the FT), but I'm certain the many investors and staff who've suffered would not agree. So...what lessons can I realistically learn from a man who says he is a qualified accoutant who's been involved in a horrifying mess, either directly or indirectly and who is still there?

Not many - especially the laughable one about accounting systems. They've still not been fixed!

How about: "If you can't find it on the map you probably don't know it exists. Therefore, leave well alone before researching thoroughly!"

It follows then that his ideas about going global don't make sense either. So why print such a statement without analysing it? Respected the FT may be, accurate and incisive it is not. On this occasion.

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