Self-Inquiry The GRACE of Accounting Firms - 1977 vs 1995 The Book takes you back to 1977 when nothing was hunky-dory. "No profession has suffered a more painful drop in public esteem than accounting; in recent years, accountants have been regularly criticized for failing to expose corporate shenanigans, and have been sued for allegedly certifying misleading company earnings reports. Four SEC complaints were filed against Peat, Marwick, Mitchell & Co., onetime auditor of such tarnished firms as Penn Central and National Student Marketing and a giant of the profession. Walter E. Hanson, 48, a former railroad accountant and senior partner (chief executive) of Peat, Marwick since 1965, moved to restore confidence by volunteering to have his company’s procedures audited by colleagues from competing firms.”

1. Self-Inquiry, Self-doubt, Self-knowledge, Self-Governance -
Corporate Transformation
An extract from my Book: Return on Intangible Measuring Corporate Fiscal and
Ethical Assets: CREAM Analytics of Policies, Practices and People:1
It addresses mainly:
1. What Kant [1724-1804] raised the question whether a science of
metaphysics with a logical structure like that of the well-established
mathematical and natural sciences is possible…
2. ..made possible, by Defining Intangible.
My emphasis here in this post is on Accounting Profession. I shall bring out
salient points from the Book.
Self-Inquiry
The GRACE of Accounting Firms - 1977 vs 1995
The Book takes you back to 1977 when nothing was hunky-dory. "No
profession has suffered a more painful drop in public esteem than
accounting; in recent years, accountants have been regularly criticized for
failing to expose corporate shenanigans, and have been sued for allegedly
certifying misleading company earnings reports. Four SEC complaints were
filed against Peat, Marwick, Mitchell & Co., onetime auditor of such
tarnished firms as Penn Central and National Student Marketing and a giant
of the profession. Walter E. Hanson, 48, a former railroad accountant and
senior partner (chief executive) of Peat, Marwick since 1965, moved to
restore confidence by volunteering to have his company’s procedures
audited by colleagues from competing firms.”2
[PB: Flipkart: https://goo.gl/Mo1f5f Amazon: https://www.amazon.in/dp/B07JQGRB231
Pothi: eB: https://goo.gl/bWPb3C pB: goo.gl/ad1Aos ]
http://www.time.com/time/magazine/article/0,9171,942901,00.html2

2. Self-Governance
Lockheed Aircraft Corp. admitted a payoff of US$22-$24 million during a
Senate subcommittee meeting. Men in high places Prime Minister Tanaka of
Japan, Prince Bernhard of Belgium, Columbian and Italian top brass were
some of the major beneficiaries…Nor would Lockheed promise to make no
more political payments. Such payments, it said, are a normal and necessary
feature of doing business in certain parts of the world, are essential to sales and
“are consistent with practices engaged in by numerous other companies
abroad."3
However with
relevance to Audit
profession since 1977
the several implications
of their inactions I
concluded the
following as GRACE of4
the Accounting
profession.
In Dec 1993, ‘IAS 9
Research and
Development
Activities’ was renamed
as IAS 9 Research and
Development Costs.
Lockheed's Defiance: A Right to Bribe? TIME: Monday, Aug. 18, 1975 TIME: Business: Auditing the Auditor:3
July 01, 1974:
G-Governance, R-Responsibility, A-Authority,C-Credibility and E-Enablement4 4
IBCM © Research /2 13

3. Self-Governance
Despite all the chaos
in the outside world,
Accounting
Profession stood by
GRACE -
Governance,
Responsibility,
Authority, Credibility
and Enabled
instrument.
Accounting
Profession is the
regulator and
primarily institutes
Ethical Responsibility
among Corporate.
Despite the media
criticism Walter E.
Hanson, of Peat
Marwick stood firm,
of GRACE. Corporate
were easy going, with
FCPA emerging out of
this scenario.
The Book has interesting review of these including Pettis Case that lead to the
first ever Whistleblowing Conference by Ralph Nader. Further the Book takes
you to 1995 a fast forward on the changes that had taken place in the interim
period. The analysis is on Intangible Assets that began surfacing in 1985 from
the Exposure Draft stage.
IBCM © Research /3 13

4. Self-Governance
In conclusion let me
present G-R-A-C-E 2
of 1995, on the trend
that took as many
years because of the
Accounting Standard
IAS 38 Intangible
Assets?
The Book
incorporates several
case study references
such as HP-
Autonomy,
Volkswagen, Nick
Leeson, Jérôme
Kerviel and various
such instances to
prove the point that
Corporate and
Regulatory
Authorities had lost a
significant controlling
authority to make
sure Ethical
Responsibility of
Corporate is
maintained. This is a
serious lapse in the Corporate structure.
IBCM © Research /4 13

5. Self-Governance
I have quoted, The
sociologist Diane
Vaughan
“normalisation of
deviance is a cultural
drift in which
circumstances
classified as “not
okay” are slowly
reclassified as “okay.”
We have imbibed a
new culture where
FCPA has no
relevance.
Accounting
profession is no
more? They are busy
talking about
emerging
technologies and AI
leaving the Audit
profession terming it
as a disappearing
species with 94% probability, only next to telemarketers? Let us face the reality,
the very purpose of Self-Inquiry.
IBCM © Research /5 13

6. Self-Governance
Self-Doubt
The Book brings into focus these 11 Challenges while discussing the points
under the five principles of IBCM.
In the same context
KPMG-EIU survey quoted
in the Book is important
for Accounting firms to
straighten out these
doubts among Corporate.
Corporate is looking for
solution from the
Accounting Firms for
filing annual and
IBCM © Research /6 13

7. Self-Governance
Quarterly reports to the public.
But Accounting Firms themselves are not equipped with the skill sets that would
establish GRACE within to aid companies to accelerate Growth and Profits in a5
Sustainable manner. Sustainability is the catchword. The Book avers:
Sustainability of efficiency that arises from the best use of Fiscal Assets, results
in profits. Sustainability of Value System that arises from the best use of Ethical
Assets adds energy and therefore greater results.
Accounting Firms must learn the process of measuring the Ethical Assets for
sustainable profits, guiding companies. The OECD study is a show case of6
helplessness of Accounting Firms as meekly submitted.
tamaso ma jyotirgamaya
Lead me from darkness to light
G-Governance, R-Responsibility, A-Authority,C-Credibility and E-Enablement5
Review of the OECD anti-bribery instruments: compilation of responses to consultation paper: 31 March 20086
IBCM © Research /7 13

8. Self-Governance
Self-knowledge
The Book by Chapter 6 brings out the Risks of Inactivity and how to convert n-
dimensional problems to n-problems of One Dimension in order to control the
Inactivity.
The knowledge of how to
MEASURE Inactivity
instantly is the hallmark of
Knowledge creation.
They are built up
methodically by Five
Principles of IBCM:
Principle #1: What gets
measured, gets managed.
Principle #2: How to
measure?
Principle #3: Corporate
Atomic Structure
Principle #4: Return on
Intangible
Principle #5: Emergent
Property Phenomenon
The Knowledge Base created for each Company is of exceptional value.
IBCM © Research /8 13

9. Self-Governance
Corporate in Human Form
The Book illustrates
the gains of treating a
business entity in
Human Form. Army
or Parliament we
look at individuals,
when we mention of
Corporate we think
of an inanimate
object represented
by its emblem. This
has to change. The
Book presents the
feeling of a business
entity as pulsating
energy, of people.
Not a sign-Board.
4 Auxiliary Limbs
In a recent post CREAM
Report HACCP HARPC Sun
Pharma “My observation on7
Sunpharma is that a CREAM
Report for the whole
organisation is warranted. It’s
not exclusive to a single
plant with a single FDA
requirements that are
continuously failing them
since 2014.”
This is because any initiative
maybe TQM or ISO or CRM
or HACCP the collective
approach to the betterment
of an organisation gets
https://www.linkedin.com/feed/update/urn:li:activity:64909824956250193927
IBCM © Research /9 13

10. Self-Governance
isolated and not all participate. Only a portion of a company and the rest are
indeed indifferent. In the Book: Knowledge Base has a slot for each person, for
each process - Creative and Action.
Accounting Firms would find it easier to interpret Qualitative Elements of
Management. Now with this knowledge Base ‘materiality clause’ is replaced by
‘material events clause’. For example, VW cheat software fiasco costing $32
billion can be button-holed. So would be the case of IL&FS. The difference of
course lies in IL&FS huge loss as well as a very many number of associated
business entities. However IBCM enables to bring together any number of
entities for an assessment of operations with a single denominator.
Accounting Firms must have a relook at what they do and where they want to
go further. In a recent decision by KPMG , KPMG is to cease undertaking non-8
audit work for the FTSE-350 companies whose accounts it supervises,
becoming the first of the 'big four' firms to make such a pledge in the aftermath
of scandals surrounding the collapse of Carillion and BHS.
Accounting Firms were the pioneers in bringing Accounting Standards to the
fore not the consulting firms led by McKinsey. They never had a role nor ever
they would. The Book discusses these aspects thoroughly. ‘Big Four’ relates to
Audit work. By this decision to drop non- Audit work for the FTSE-350
companies the Accounting Firm KPMG would surely remain ‘big four’. By
simply extending the Ethical Responsibility aspects, GRACE to non-Audit work
the ‘Big Four’ firms can surely compete with consulting firms led by McKinsey
and Bains, in a better and competitive manner? Carillion is the result of ‘Big
Four’ firms plus many a consulting firm. The Book brings out the essence of ‘big
eight’ from 1977 that has come to ‘Big Four’ now.
There are two issue areas - i. Focus only on Audit and leave the Consulting work
to Firms led by McKinsey; and ii. Improve skill sets on measuring Ethical Assets
for Audit and extend the same to non-audit works. The second is what is
warranted. McKinsey led Consulting firms would find difficult to establish
GRACE of their work. So there is a good chance for Accounting Firms led by
‘Big Four’ to lead consulting to as many?
Accounting scandals prompt KPMG ban on non-audit work8
IBCM © Research /10 13

11. Self-Governance
Knowledge is the Goal of Ethics. We are struggling so much with Data
explosion. It’s of no use. Whereas Ethics is of Qualitative Elements and there’s
no data on Ethical Assets? Accounting firms should lead the way for Corporate.
Having lost the opportunity by introducing IAS 38 Intangible Assets, time now is
for self-inquiry leading to Self-Knowledge.
Hitherto ‘Big Four’ relates to Revenue Generation of Accounting Firms. With the
skill-sets added to measure Ethical responsibility the scenario is bound to
change.In an organisation remove the revenue aspects for the highest and
lowest paid individuals, both are rated according to their ability to absorb
Ethical values. The Rating system the Book advocates for Corporate CREAM
Report if tweaked a little can be transformed to a GRACE Report for Accounting
Firms. ‘Big Four’ would disappear and in its place any number of Accounting
Firms can be Rated high by their Ethical Assets.
Self-Governance
‘Big Four’ actively promote AI. This Book brings in the element of Self-
Governance. It shall surely happen fusing Ethical and Fiscal Responsibility.
Adopting Ethical Responsibility is the criterion.
Corporate consists of small units. Corporate CEOs do look towards better
prosperity and growth. Accounting Firms shall not assume Corporate do reject
the chances of creating robust Ethical Assets of their own. Small drops make an
ocean. Smaller companies do have Ethical Standards.
IBCM © Research /11 13

12. Self-Governance
Attrition of Ethical Values
Man has not arisen from an ape, but attrition of Ethical values would lead to
destruction of mankind. A
few may survive walking
around on this planet, like
apes. Would take several
millenniums to start the
evolution of Man. Ape is
the end product of
Modern civilisation. As
the sociologist Diane
Vaughan says
“normalisation of
deviance is a cultural drift
in which circumstances
classified as “not okay”
are slowly reclassified as
“okay.” If so, doomsday is
not far off?
“Big Four’ has a
responsibility. GRACE be
the motto. But sure many
would emerge to establish
Ethical Values.
When the culture of the
organisation is established
by Ethical Responsibility it
is run without any
supervision. That’s self-
Governance.
IBCM © Research /12 13

13. Self-Governance
About the Book:
Dr. MVK Sarma [[ https://www.transformhealth-it.org/index.php/speakers/dr-
sarma-m-v-k ] went through my Book thoroughly and we had a 70’ discussion
on it. He says: As shared the whole concept is a breakthrough in Corporate
world. Accounting firms should read the Book.
Jayaraman Rajah Iyer
+919487390439
jayar@ibcm.in
The Book: Return on Intangible Measuring Corporate Fiscal and Ethical Assets:
CREAM Analytics of Policies, Practices and People:9
[PB: Flipkart: https://goo.gl/Mo1f5f Amazon: https://www.amazon.in/dp/B07JQGRB239
Pothi: eB: https://goo.gl/bWPb3C pB: goo.gl/ad1Aos ]
IBCM © Research /13 13