What
does Enron style accounting have in common with changes
being made by the BC government? To answer that question,
read the April 15th stories on the business pages about
the Securities and Exchange Commission appointing William
McDonough, retiring president of the Federal Reserve Bank
of New York, as head of the Public
Company Accounting Oversight Board. The US Congress
created the Board in the wake of the Enron scandal and gave
the SEC the authority to appoint its chair (paid over $500,000
US per year).
The
Enron scandal focused attention on the conflicts of interest
that arise when auditors ignore their responsibilities because
their consulting arm is also doing business with a client.
The principle of separation of powers is fundamental
to good organizational design and is finally being applied
to auditors. Why can't the Campbell government understand
that it is a very bad idea to put the fox in charge of guarding
the hen house?
During
estimates debate on the morning of April 10th, Opposition
Leader Joy MacPhail questioned Minister of Sustainable Resources,
Stan Hagen, on why his ministry laid off 9 biologists. The
Campbell government is building a "data warehouse"
to be used for decision making ranging from land use decisions
to the management of wildlife. At a staged
cabinet meeting on October 24, 2001, Hagen speculated
on how such data could be used for entrepreneurs to make
decisions at the click of a mouse. Inaccurate or incomplete
information could have very significant consequences. The
Campbell government appears to be depending on the private
sector for collecting data with no checks and balances -
no separation of power. It is not that the public sector
is good and the private sector is bad, as Hagen tried to
characterize the criticism he was receiving. It is a matter
of separating powers so no one is in the position of benefiting
from dual responsibilities; you don't ask the fox to guard
the hen house.
The
following is part of the debate as recorded in Hansard
for April 10th:
Hon.
S. Hagen: In order to operate efficiently and within
our budget, we have instituted and struck up a number
of partnerships. We have partnerships with five licensees
where we share data on forestry and hydrology and wildlife
and other information. We have partnerships with the federal
government of Canada. We have partnerships with B.C. Hydro.
That has allowed us to operate very efficiently and still
provide the information we need to make good, science-based
decisions.
J.
MacPhail: Could the minister name the five licensees,
please?
Hon.
S. Hagen: Canfor, Weldwood, Weyerhaeuser, Slocan Forest
Products and Lignum.
J.
MacPhail: Excuse me? Partnerships with the private
sector who have a vested interest in the decisions? It's
their information upon which the government is relying
to make land use decisions?
Hon.
S. Hagen: Is the member opposite suggesting that professional
biologists who work in the private sector are not professionals
and will not provide accurate information?
J.
MacPhail: Answer the question. It is not about the
integrity of the individual; it's about the source of
the information. Is the minister suggesting that in land
use decisions he claims are 100 percent science-based,
the information for making those decisions comes from
the very companies who benefit from those decisions? Can
the minister spell "conflict"?
Hon.
S. Hagen: I'll repeat my question to the member opposite
with regard to the professionalism of these individuals
who are working together with our professionals. We created
the professional biologists act to make sure that objectivity
would be in place. Is the member opposite suggesting that
only people who work in the Ministry of Finance should
be able to do audits on financial statements?
J.
MacPhail: Yes, I am, when it comes to taxes. Yes.
That's the way it works.
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