The Effect of the Global Financial and Ethical Crisis upon CPA's and their Clients

THE FALLING DARKNESS 1


The Effect of the 2009 Global

Financial and Ethical Crisis

upon Certified Public

Accountants and their

ClientsQuito, EcuadorJanuary 24, 2009

THE FALLING DARKNESS


THE FALLING DARKNESS OR

THE COMING DAWN

• "At fifteen, I aspired to learning.

• At thirty, I established my stand.

• At forty, I had no delusions.

• At fifty, I knew my destiny.

• At sixty, I knew truth in all I heard.

At seventy,At seventy, I could I could followfollow thethe wishes wishes of my heartof my heart without without doing wrong."doing wrong."

Confucius Confucius said:said:


"More cases of insolvency are to be attributed to Frauds than shrewd business men are aware of, and though the advice is almost universally unpopular, it is urged on merchants to overcome their disinclination for this species of labor, and give a little time to a thorough investigation of their accounts....Newspapers daily chronicle the detection of new cases of embezzlement, and still our merchants shut their eyes and believe all servants dishonest but their own. While they admit the shrewdness of their accountants in other matters, they blindly imagine them too trustworthy, or too fearful of consequences to deceive them in regard to the manipulation of their finances; yet in case of the death of an old favorite bookkeeper, or even of a partner, who has had the management of the cash, how often do we find that their apparently beautifully balanced accounts are teeming with a succession of fraudulent entries that had been continued through years.“

H. J. Mettenheimer, AUDITOR's GUIDE, Being a Complete Exposition of Bookkeeper's Frauds, 1869 (The United States of America's first known book on auditing).


concurrent crises right now underway

• terrorism • global warming (environmental)• official corruption considered inevitable, or even

“normal” • public deficits and debt • economic instability • Organized crime and gangs (Mexico, etc.)• family instability • ongoing war (Iraq, Afghanistan) • pending war (Palestine, Israel, Iran, North Korea)• authoritarianism (dictatorships)• “21st century socialism”• loss of credibility of Legislative and Judicial branches• the prostitution of democracy (“dollarcracy’’)• religious extremism & other fanaticisms• cultural and ethical decline • and many, many others

THE FALLING DARKNESS 6THE FALLING DARKNESS

Where does crisis end and chaos begin?


During the past two decades two famous …walls fell

The Berlin Wall

and

The Street named Wall...


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© The Washington Post

From The Washington Post[Next 7 slides are © The Washington Post]


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Marketplace Myths (1)

Government is, always and everywhere:wasteful, spendthrift, incompetent,

inefficient, uneconomical and ineffective

Business is, always and everywhere:ethical, frugal, thrifty, competent, efficient, economical and effective

Private enterprise can, always and everywhere, operate more efficiently and

effectively than a public enterprise.

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Marketplace Myths (2)

The commercial market-place can, always and everywhere:

allocate resources more efficiently than governments.

There is no market failure. Always and everywhere, there is only governmental

interference, together with policy and regulatory failure.

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The nature of the current crisis does not differ greatly from those before…

BUT the times differ greatly

• the scope and size differ greatly• the technology in use differs greatly• the interlinkage of the world financial system differs greatly, and • the people involved differ very, very greatly.



If aIf a major major depressiondepression does does arrive Ita will be arrive Ita will be

much more much more complex to handle complex to handle

than thatthan that of the of the 1930’s due to the 1930’s due to the fact that a much fact that a much greater degree of greater degree of

selfishness, selfishness, unethical conduct, unethical conduct,

crime and crime and corruption will corruption will accompany it.accompany it.



MONEYcan buy a house,but not a home,


MONEY CAN BUY A BED,BUT NOT SLEEP,


MONEY CAN BUY A WATCH,BUT NOT TIME,


MONEY CAN BUY A BOOK,

BUT NOT KNOWLEDGE


MONEYMONEY CAN BUY A HIGH POSITION,CAN BUY A HIGH POSITION,BUT NOT RESPECT,BUT NOT RESPECT,


MONEYMONEY

CAN PAY A DOCTOR,CAN PAY A DOCTOR,BUT NOT BUY HEALTH,BUT NOT BUY HEALTH,


MONEY CAN BUY BLOOD,BUT NOT LIFE


MONEY CAN BUY SEX,BUT NOT LOVE





We have tall skyscrapers but they rapidly fall to pieces; we have supersonic airplanes but they can be converted into flying bombs; we ended a world war, but we continue to wage regional, territorial and

national wars; we ended the cold war, but we have hot terrorism; we have great multinational enterprises, but they go bankrupt at the drop

of a hat; we have global firms of lawyers and auditors, but they lose sight of

professionalism; we have outstanding stockbrokers and bankers, but we cant trust them; we have all-powerful governments, but they are deaf to the cry of poor

children; we have promising leaders, but they are duplicitous; we have dynamic executives, but they are selfish; we have many job applicants, but they do not want to serve the public;

Paradox 2009 – Planet Earth, Year 2009, 20th Century, Third Millennium, First Decade We seek Confidence, Quality and Strength in times of Change, Crisis, and Corruption

The Ethics Crisis


Paradox 2009 – Planet Earth, Year 2009, 20th Century, Third Millennium, First Decade - We seek Confidence, Quality and Strength in times of Change, Crisis, and Corruption

we have idealistic men and women, but they become lost in the pursuit of elegant, promiscuous and dangerous lifestyles;

we have tall buildings, but short tempers; we have broad superhighways, but narrow points of view; we have strong financial institutions, but weak financial results; we spend more, but have less; we buy more, but take little pleasure in our belongings; we have bigger houses, but smaller families; we have more electronic and digital gadgets,

but less time to use them; we have more university degrees, but less common sense; we have greater knowledge, but lesser good judgement; we have more specialists, but also more problems; we have better medicines, but poorer health;

The Ethics Crisis


Paradox 2009 – Planet Earth, Year 2009, 20th Century, Third Millennium, First Decade We seek Confidence, Quality and Strength in times of Change, Crisis, and Corruption

we drink too much, we smoke too much; we eat too much; we spend too much; we laugh little; we complain a lot; we drive fast in the city and even faster out of it. we get mad like lighting; we are slow to forgive; we stay up too late; we awaken very tired; we read little; we watch TV too much; ...and we pray ?… only when we are

.

The Ethics Crisis




““We start 2009 in the midst of We start 2009 in the midst of a crisis unlike any we have a crisis unlike any we have

seen in our lifetime – a crisis seen in our lifetime – a crisis that has only deepened over that has only deepened over

the last few weeks. Nearly two the last few weeks. Nearly two million jobs have now been million jobs have now been lost,…2.8 million Americans lost,…2.8 million Americans

who want and need full-time who want and need full-time work have had to settle for work have had to settle for

part-time jobs. Manufacturing part-time jobs. Manufacturing has hit a twenty-eight year has hit a twenty-eight year

low. Many businesses cannot low. Many businesses cannot borrow or make payroll. Many borrow or make payroll. Many families cannot pay their bills families cannot pay their bills

or their mortgage. Many or their mortgage. Many workers are watching their life workers are watching their life savings disappear. And many, savings disappear. And many,

many Americans are both many Americans are both anxious and uncertain of what anxious and uncertain of what

the future will hold.”the future will hold.”


““We start 2009 in the midst of We start 2009 in the midst of a crisis unlike any we have a crisis unlike any we have

seen in our lifetime – a crisis seen in our lifetime – a crisis that has only deepened over that has only deepened over

the last few weeks. Nearly the last few weeks. Nearly two million jobs have now two million jobs have now

been lost,…2.8 million been lost,…2.8 million Americans who want and need Americans who want and need

full-time work have had to full-time work have had to settle for part-time jobs. settle for part-time jobs. Manufacturing has hit a Manufacturing has hit a

twenty-eight year low. Many twenty-eight year low. Many businesses cannot borrow or businesses cannot borrow or make payroll. Many families make payroll. Many families

cannot pay their bills or their cannot pay their bills or their mortgage. Many workers are mortgage. Many workers are

watching their life savings watching their life savings disappear. And many, many disappear. And many, many Americans are both anxious Americans are both anxious

and uncertain of what the and uncertain of what the future will hold.”future will hold.”


“We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability. Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve.

The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.”


Obama American Recovery and Reinvestment Plan

• Doubling the production of alternative energy in the next three years. • Modernizing more than 75% of federal buildings and improve the energy efficiency of two million American homes• Making...immediate investments…(to)…ensure…all…medical records are computerized. • Equipping…schools, community colleges, and public universities with 21st century classrooms, labs, and libraries. • Expanding broadband across America• Investing in the science, research, and technology…(for)… new medical breakthroughs, new discoveries, and entire new industries.

Source: www.whitehouse.com


U.S. Losses May Reach $3.6 Trillion

By Henry Meyer and Ayesha Daya © Bloomberg

Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis.

“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg…


Charts – 2008

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USA:USA:

Bush: Emergency Economic Bush: Emergency Economic Stabilization Act of 2008 Stabilization Act of 2008 $700,000,000,000$700,000,000,000

Obama: American RecoveryObama: American Recovery

and Reinvestment Plan and Reinvestment Plan $825,000,000,000$825,000,000,000

UK (Banks)UK (Banks) $217,813,500,000 $217,813,500,000

Denmark (Banks)Denmark (Banks) $ 18,000,000,000$ 18,000,000,000

France (Banks)France (Banks) $ 13,600,000,000$ 13,600,000,000


AICPA ISSUES AUDIT RISK ALERTAICPA ISSUES AUDIT RISK ALERT “The U.S. is experiencing great economic instability

and the U.S. government is taking unprecedented actions in efforts to curtail the economic crisis…

The length of the recession and if the U.S. enters into a depression is yet to be determined.

There is no doubt the U.S. has taken unprecedented actions to prevent worsening economic conditions including facilitating sales of ailing financial institutions, passing the Emergency Economic Stabilization Act of 2008, rescuing the U.S. automakers, and dramatically increasing the monetary programs available from the Federal Reserve….

Few, if any, industries are immune to the affects of the crisis so it is more critical than ever for auditors to understand the rapidly changing business, economic, and regulatory environments in which your clients operate.” (emphasis added)


AICPA AUDIT RISK ALERTAICPA AUDIT RISK ALERTAUDIT & ACCOUNTINGAUDIT & ACCOUNTING

Some risks may include: constraints on the availability of

capital and credit, going concern and liquidity issues, marginally achieving explicitly

stated strategic objectives, use of off-balance-sheet financings, special-purpose entities and other

complex financing arrangements, volatile real estate markets and the

credit crisis, which result in significant measurement

uncertainty…


AICPA AUDIT RISK ALERT AICPA AUDIT RISK ALERT Causes of the CrisisCauses of the Crisis

“Among the causes that have been cited for the economic crisis...(is)… FASB Statement No. 157…(that)…defines fair value and establishes a framework for measuring fair value; however it does not dictate when an entity must measure something at fair value, nor does it expand the use of fair value in any way.

The specific area…in the spotlight is the lack of guidance in applying fair value in an illiquid or distressed market, such as the current one...a study of the effects of FASB Statement No. 157 on the current economic crisis…(was recently mandated by Congress)…

Another important topic…is determining when an investment is other-than-temporarily impaired. It is important to note that other-than-temporary does not mean permanent. Determining whether an other-than-temporary impairment has occurred requires significant judgment based upon numerous considerations and GAAP does not provide any “bright lines” in making this conclusion.”


Declaration on the Global Financial Crisis Declaration on the Global Financial Crisis and the Role of Accountants and and the Role of Accountants and AuditorsAuditors - - RECOMMENDATIONSRECOMMENDATIONS

by the Interamerican Accounting Association (IAA) (Perform a)“Comprehensive review of financial instruments themselves including their valuation, recording and presentation in the financial statements.

Return to original historical value as an accounting principle in substitution for reasonable fair value as a means of properly presenting financial condition. This means we recommend the complete elimination of fair value accounting as a source of accounting entry.

Maintain fair value as complementary information as financial material for circumstantial reference...”

(other recommendatios were also made)


“Fair Value Accounting is causing a large part of the problem at this moment…”

Steve Bartlett, President and CEOFinancial Services RoundtableTestimony to: U.S. House of RepresentativesFinancial Services Committee18 November, 2008


YearYear

Cost in 2008 U.S.

DollarsDollars

Penn Central Railroad

1970$3.2 billion

Lockheed

1971$1.4 billion

Franklin National Bank

1974$7.8 billion

New York City

1975$9.4 billion

Chrysler 1980$4.0 billion

Continental

Illinois1984

$9.5 billion

Savings & Loan

1989$293.3 billion

Airline Industry

2001$18.6 billion


YearCost in

U.S. Dollars

Bear Stearns

2008$30 billion

Fannie Mae /

Freddie Mac

2008$200 billion

American International Group

(A.I.G.)

2008$150 billion

Auto Industry

2008$25 billion

Troubled Asset Relief

Program

2008$700 billion

Citigroup 2008$247.5 billion

Chrysler/G.M.

2008$17.4 billion



KEY POINTS – personal opinionsKEY POINTS – personal opinions1.1. Many, if not all, of the present crises are intimately Many, if not all, of the present crises are intimately

related and they affect each other.related and they affect each other.2.2. All the crises regardless of scope are made All the crises regardless of scope are made

extremely more complicated and unstable by the extremely more complicated and unstable by the enormously advancing changes in technology at the enormously advancing changes in technology at the fastest rate in history.fastest rate in history.

3.3. The Global Financial Crisis is directly and The Global Financial Crisis is directly and unequivocally linked to the crises of official unequivocally linked to the crises of official corruption and ethical and cultural decline. This corruption and ethical and cultural decline. This linkage directly affects Certified Public Accountants linkage directly affects Certified Public Accountants and their clients.and their clients.

4.4. The effect of this double-headed crisis is almost The effect of this double-headed crisis is almost impossible to predict due to the interaction of all the impossible to predict due to the interaction of all the various crises mentioned plus the surging parallel various crises mentioned plus the surging parallel impact of new technologies and other accelerating impact of new technologies and other accelerating changes.changes.


KEY POINTS – personal opinionsKEY POINTS – personal opinions5. 5. The expenditure of the vast sum of money expected to (but The expenditure of the vast sum of money expected to (but

not sure to) control the crisis will drastically affect the not sure to) control the crisis will drastically affect the financial future of the USA and its citizens unto many future financial future of the USA and its citizens unto many future generations. In its present financial condition the country generations. In its present financial condition the country simply cannot afford it, but it cannot afford not to attempt simply cannot afford it, but it cannot afford not to attempt it. A severe devaluation of the dollar accompanied by it. A severe devaluation of the dollar accompanied by extreme inflation would appear to me to be absolutely extreme inflation would appear to me to be absolutely inevitable. We have, of course, seen similar situations inevitable. We have, of course, seen similar situations across Latin America.across Latin America.

6. We can only guess at that impact using several possible 6. We can only guess at that impact using several possible alternative scenarios:alternative scenarios:

a. Return to “normalcy.”a. Return to “normalcy.” A significant recession A significant recession that will pass fairly quickly as have all the other that will pass fairly quickly as have all the other recent ones with the world economy stabilizing recent ones with the world economy stabilizing within one or two years, the Dow Jones stabilizing within one or two years, the Dow Jones stabilizing between 9,000 and 12,000 and eventually between 9,000 and 12,000 and eventually expanding again. expanding again.

Long-Term Recovery.Long-Term Recovery. A much longer A much longer recession/depression that in the long run, perhaps recession/depression that in the long run, perhaps four to ten years, will be largely overcome by four to ten years, will be largely overcome by governmental measures taken to strengthen the governmental measures taken to strengthen the economy and better regulate financial markets, economy and better regulate financial markets, operations and transactions…or by mobilization for operations and transactions…or by mobilization for a new World War.a new World War.


KEY POINTS – personal opinionsKEY POINTS – personal opinionscc. . Crisis turns into chaosCrisis turns into chaos...a return to oppression....a return to oppression.

A collapse of the world economic system A collapse of the world economic system including the decline and possible demise of the including the decline and possible demise of the United States as a key global economic power United States as a key global economic power resulting in chaos across the planet, widespread resulting in chaos across the planet, widespread panic, disease, wars and readjustments of panic, disease, wars and readjustments of national alliances and boundaries, including the national alliances and boundaries, including the possibility of the larger nations breaking up into possibility of the larger nations breaking up into smaller more compatible groupings, some smaller more compatible groupings, some smaller nations merging and most nations smaller nations merging and most nations finding it impossible to govern without finding it impossible to govern without extremely authoritarian regimes. This could extremely authoritarian regimes. This could conclude the past three century era of conclude the past three century era of experimentation with democracy, capitalism, experimentation with democracy, capitalism, socialism and communism and result in a new socialism and communism and result in a new era of powerful rulers like the old monarchies, era of powerful rulers like the old monarchies, the end of privacy and the suppression of most the end of privacy and the suppression of most dissent. Several larger powers could eventually dissent. Several larger powers could eventually control the world…or wage war over it.control the world…or wage war over it. (This is a (This is a worst case scenario. It could hopefully be worst case scenario. It could hopefully be somewhat less ominous).somewhat less ominous).


Pessimism of Financial Executives Pessimism of Financial Executives at All Time Highat All Time High

From a survey of chief financial officers and senior-level executive Certified Public Accountants conducted by the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School

• “ “Most CPAs working in business and industry Most CPAs working in business and industry don’t expect any improvement in the U.S. don’t expect any improvement in the U.S. economy before the second half of 2009 or the economy before the second half of 2009 or the first half of 2010,”… first half of 2010,”… • Pessimists outnumbered optimists by 16 to 1. Pessimists outnumbered optimists by 16 to 1. • Eighty-two percent of respondents indicated they Eighty-two percent of respondents indicated they were pessimistic or very pessimistic, up from 62 were pessimistic or very pessimistic, up from 62 percent in a previous similar survey. percent in a previous similar survey. •18 percent of respondents said that they were 18 percent of respondents said that they were “very pessimistic,” three times the number who “very pessimistic,” three times the number who felt that way in the earlier survey.felt that way in the earlier survey.


Financial Executive CPA’s discount Financial Executive CPA’s discount short-term improvementsshort-term improvements

From a survey of chief financial officers and senior-level executive Certified Public Accountants conducted by the American Institute of Certified Public Accountants and the University of North Carolina’s Kenan-Flagler Business School

Forty-five percent of respondents now expect their companies to contract, while 31 percent of respondents still expect some expansion in the next twelve months. Only 9 percent expect the

economy to begin to improve before the second half of 2009. Forty-two percent expect improvement in the second half of 2009, and 49 percent see no improvement at all until 2010 or later.


Extracts from the article “After The Crash:

We shall need a New Market!” (1)

by Robert Peston of BBC NEWS (next 4 slides)

59

• There are reasons to believe that credit from taxpayers can’t and won’t be repaid for many years, in that this credit is financing the correction of huge financial and trading imbalances between the western and eastern economies.

• We’ve witnessed a semi-permanent nationalization of the banking system and will soon see significant taxpayer support for real companies in the real economy.

• Thus, our banks and private-sector companies will have to work much harder to sustain the goodwill of those who are keeping them alive: millions and millions of taxpayers.

Robert Peston, 8 December 2008 [BBC NEWS]


After The Crash:

We shall need a New Market! (2)

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• The biggest lesson of all is that we are a million miles from having created the political and regulatory institutions to help us contain the risks of globalization. We and most of the world may well have been beneficiaries of the open global economy. But as millions lose their jobs in Europe and the US in the coming year, the benefits will be forgotten.

• That means that those running our biggest commercial businesses will have to be more visible. They’ll have to manifest a genuine understanding not only of the anxieties of their employees but of all taxpayers. Those chief executives who succeed will be those who imbue in their businesses very simple, commonsense standards of decency.



After The Crash:


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• They’ll almost certainly be paid less for doing more, because the pricking of the debt bubble has undermined the institutions – the private-equity firms, hedge funds and investment banks – that were ratcheting up the pay of all business leaders.

• If the unfettered movement of capital, goods and services is going to survive, if there’s not going to be a retreat into national fortresses that could impoverish all of us over the longer term, we’ll have to find a far better way of monitoring global risks and of bringing governments together to deal with these risks.



After The Crash:


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• Some may see this as a threat to national sovereignty, as the thin end of an anti-democratic wedge that’ll see the world ruled by unaccountable bureaucrats. Reconciling our political traditions with the imperative of making safe the globalised world will be a challenge, to put it mildly. But it’s not a challenge we can shirk.



“In November 2002, Federal Reserve Chairman Ben Bernanke

cracked wise in his now infamous ‘Helicopter Theory’ speech.

When it came time to pay our debts back, he said, we could we could

simply fire up the printing press

simply fire up the printing press. The world would be

forced to accept our paper in lieu of those debts. If need be,

the Fed “could drop dollars from helicopters”

“could drop dollars from helicopters” in order to

get the money into circulation. Unfortunately, traders around

the globe didn’t react kindly to his comments: Since his

speech, the dollar has declined over 40%

the dollar has declined over 40% against a

basket of world currencies. It’s likely we’ll continue to see

a steady downward trend in the dollar, occasionally

punctuated by rallies as traders take profits. And it’s unlikely

our government will be able to do anything soon to stop it…

The Federal Reserve stopped reporting the M3 value, the

U.S. money supply, in 2006. Best guess is it’s increasing at

about a 10% rate. But about $1.5 trillion of additional

‘money’ in bank bailouts and credit will be put into the

financial system in 2008 alone. When that much paper

money is printed or electronically pumped into the credit

markets you can bet your bottom dollar (excuse the pun)

inflation will follow.”

inflation will follow.” Extracted from Money Morning Dollar Report titled

“Why the Federal Reserve Can’t Save the Dollar”

Copyright 2008–present, Monument Street Publishing, LLC

105W.Monument St., Baltimore,MD 21201

“Helicopter Theory”


Global Trends 2025: A Transformed World published by the National Intelligence Council

“…the impacts from the financial crisis will depend heavily on government leadership. Proactive fiscal and monetary policies probably will ensure the current panic and likely deep national recessions will not turn into an extended depression, although reduced economic growth could slow globalization’s pace, increasing protectionist pressures and financial fragmentation.”






Anti-Corruption: Expect tighter Anti-Corruption: Expect tighter enforcement in hard timesenforcement in hard times

AA Control Risks Group White PaperControl Risks Group White Paper

““In the midst of the worst In the midst of the worst financial crisis in recent history, financial crisis in recent history, lack of oversight and regulation lack of oversight and regulation is seen by many as one of the is seen by many as one of the major causes for falling global major causes for falling global markets. Increased regulations markets. Increased regulations and greater government and greater government scrutiny are certain to come.”scrutiny are certain to come.”


“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest....“....He intends only his own gain, and he is in this as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest he frequently promotes thatof the society more effectuallythan when he really intendsto promote it.”

Adam Smith in Wealth of Nations


The Invisible HandThe Invisible Hand

Needs a visble Needs a visble glove so we can glove so we can see what it is see what it is dong and, if dong and, if necessary necessary regulate it.regulate it...


“I argue that the first fundamental theorem of welfare economics - asserting the efficiency of competitive markets - is fundamentally flawed. Quite contrary to that theorem, competitive economies are almost never efficient...”

Joseph E. Stiglitz, 2001 Nobel Laureate in Economicsin Whither Socialism


The Colonial Version of Trade

The New Reverse-Colonial Version of Trade

The colonial powers – notably Britain; Netherlands; France; Portugal; Spain. – traded trinkets with, e.g. Indians; Chinese; Africans; Native Americans, in exchange for valuable gold, silver, spices and other items of wealth.

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The former colonial, colonized and other, powers – notably USA; Canada; Australasia; Western Europe; and, Japan. – buy trinkets and toys (including economy cars; computers; electronics; etc., from e.g. The: Indian sub-continentals; Chinese; Koreans; Malaysians; and, many others, in exchange for valuable Foreign Exchange Reserves


””The financial statements The financial statements have been prepared in have been prepared in accordance with standards for accordance with standards for Financial Reporting and Financial Reporting and Accountng for Unpriceable Accountng for Unpriceable Deriviatives (FRAUD)”Deriviatives (FRAUD)”


Therefore, using “Creatively Therefore, using “Creatively Regulated Accounting Regulated Accounting Practices” (CRAP) we hereby Practices” (CRAP) we hereby certify that these financial certify that these financial statements represent a true statements represent a true and fair view of the state of and fair view of the state of affairs of the company, as at affairs of the company, as at the date of the balance sheetthe date of the balance sheetand of the activities for the and of the activities for the year then ended.year then ended.


“Without a moral basis capitalism would just become the means by which the powerful would concentrate their wealth”.

Boris Fyodorov, Russian economic reformer, died on November 20, 2008, aged 50



??


Corruption?Corruption?Cancer? Fungus?Cancer? Fungus?Plague?Plague? Curse? Curse?

AIDS?AIDS? Insanity? Insanity?


Corruptionn is aCorruptionn is aHEART Problem ProblemCorruptionn is aCorruptionn is aHEART Problem Problem





The corruption triangle

POWER

CONTROL STANDARDS & VALUES


Questioner: Dr. Krugman, what do you intend to do with your $1.4 million Nobel Prize money? Paul Krugman: It is now worth only $1.2 million, because of the change in the US$ exchange rate. Anyhow, I have not, yet, decided. Right now, I am just trying to find a safe bank, in which to deposit the money, whilst I make up my mind!

Paul Krugman, Nobel LaureateAddress to the National Press Club19, December 2008


"Accountability isn't hard to define. It's

the concept that every individual is responsible for his or her actions, is liable for their consequences, and must answer to someone if these actions harm others...Of the many shining values that hold together the fabric of civilization - honesty, kindness, truthfulness, generosity, decency - I truly think that accountability may be the greatest of them all. Without it there can be no respect, no trust, no law --- ultimately, no society.• My job as a police officer is to impose accountability on people who refuse, or have never learned to impose it on themselves...We try to enforce external controls by enforcing the law...But as every cop knows, external controls on people's behavior are less effective than internal controls, such as guilt, shame, embarrassment, fear of punishment, and reluctance to face public condemnation or ostracism.• The sense of guilt or remorse once associated with the commission of a felony has vanished...If we exempt...(the criminal...,even partly, from accountability, we become a society of endless excuses, where no one is prepared to accept responsibility for anything.“… Rueben M. Greenberg


…encourage the young men to be self-controlled. In everything set them an example by doing what is good. In your teaching show integrity, seriousness and soundness of speech that cannot be condemned, so that those who oppose you may be ashamed because they have nothing bad to say about us. Titus 2:6-8


“With self discipline

Almost anything is possible.”

Teodoro Roosevelt





“The day may dawn when fair play, love for one’s fellow man, respect for justice and freedom,

will enable tormented generations to march forth

serene and triumphant from the hideous epoch in which we have to dwell. Meanwhile, never

flinch, never weary, never despair.”

Winston Churchill Last Commons Speech

1955




THE FALLING DARKNESS 96THE COMING DAWN

A code of ethics that has endured for over 3,000 years:

Walk with integrity

Do what is right

Speak the truth from your heart

Do not slander others

Do your neighbor no wrong

Do not spread rumors

Keep your word...even when it hurts

Lend money without usury

Do not accept a bribe

Despise a vile man

Honor those who revere God

by David, King of Israel and Judah

(adapted from Psalm 15)

THE FALLING DARKNESS 97www.jimwes.com

The Effect of the Global Financial and Ethical Crisis upon CPA's and their Clients

Economy & Finance