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The Need For Auditor Independence For Effective Corporate Governance

Contributed by Leighton McKnight 
for the ICAJ Current Affairs Feature, 
"Everybody's Business: ICAJ's Perspective"

Internal auditing is defined by the Institute of Internal Auditors as an independent, objective assurance and consulting activity, designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

External auditing involves the independent examination of financial statements prepared based on generally accepted accounting frameworks and the expression of audit opinions thereon, in accordance with generally accepted auditing standards. The external audit process is an independent check with the aim of adding credibility to financial reporting for the benefit of stakeholders

Independence is, therefore, a fundamental ingredient for the effectiveness of both the internal and external audit processes, thus, facilitating good corporate governance. Having auditors that are not independent is inherently contradictory, as the audit process is firmly predicated on independence

An effective corporate governance system must, therefore, have safeguards to protect the independence of auditors .... more>>

Contributed by Dr. Jenifer Daley, Member of the ICAJ 
for the feature 
"Everybody's Business: ICAJ's Perspective"

On Wednesday, September 15, 2004, Jamaicans were busy evaluating the effects of hurricane Ivan that had destroyed homes and property only a few days earlier. On that day, Martha Stewart, America's domestic goddess, held a press conference at her company and announced that she would like to begin her prison sentence immediately rather than wait for the results of an appeal. Fifteen months earlier in June 2003, criminal charges were brought against Martha Stewart for obstruction of justice, conspiracy and securities fraud, in addition to the civil charge of insider trading. This all stemmed from the fact that she instructed her stockbroker to sell shares she held in a company founded by her friend. It is alleged that her instructions were based on information she received regarding specific sales by other individual shareholders - contrary to what the law allows.

Over the period December 2001 to September 2004, it became clear that while much emphasis was placed on what Stewart did, equal or greater emphasis was placed on the fact that she tried to deny what she did. In an era of declining corporate trust and increasing corporate scandals resulting from white-collar crimes, as well as efforts to combat corruption and enhance public confidence, the question of ethics is a ponderous one... more>>

Contributed by Dr. Jenifer Daley, Member of the ICAJ,
for the feature "Everybody's Business: ICAJ's Perspective"

On Wednesday, September 15, 2004, Jamaicans were busy evaluating the effects of hurricane Ivan that had destroyed homes and property only a few days earlier. On that day, Martha Stewart, America's domestic goddess, held a press conference at her company and announced that she would like to begin her prison sentence immediately rather than wait for the results of an appeal. Fifteen months earlier in June 2003, criminal charges were brought against Martha Stewart for obstruction of justice, conspiracy and securities fraud, in addition to the civil charge of insider trading. This all stemmed from the fact that she instructed her stockbroker to sell shares she held in a company founded by her friend. It is alleged that her instructions were based on information she received regarding specific sales by other individual shareholders - contrary to what the law allows...............more>>

Contributed by C. Patricia Hayle,
ICAJ Past President, for the ICAJ Current Affairs Feature,
"Everybody's Business: ICAJ's Perspective"

In part one, I outlined certain misconceptions regarding the national Accountancy profession and the new approaches to address them that are now possible as a result of legislative changes approved by the Senate on Friday, January 30, 2004. The amendments to the Public Accountancy Act (PAA) finally enable the Public Accountancy Board (PAB) to monitor and ensure compliance of their members (Registered Public accountants - RPAs). Let me now start by addressing the international benchmarks!!... more>>

Contributed by C. Patricia Hayle,
ICAJ Past President, for the ICAJ Current Affairs Feature,
 "Everybody's Business: ICAJ's Perspective"

Expectations of the public have risen dramatically over the past few years, resulting from corporate failures that, to at least some extent, were attributed to audit failures. These expectations apply to the entire profession, across the spectrum of practice, industry & commerce, public sector and academia... more>>

Accounting for the Fiscal Deficit

Contributed by Dennis Chung, Member,
ICAJ for the Current Affairs Feature,
"Everybody's Business: ICAJ's Perspective"

Recently there has been much debate regarding the true level of the fiscal deficit. The opposition party has argued that it stands closer to 10% while others have put it at 6 - 7%. All of this must be confusing to the man on the street but more importantly the potential or existing investor, who needs to understand the facts... more>>

Changes in the Structure & Content of CPA Exams

Contributed by Mr. Rohan Chambers,
Member, ICAJ for the Current Affairs Feature,
"Everybody's Business: ICAJ's Perspective"

The American Institute of Certified Public Accountants (AICPA) in collaboration with the National Association of State Boards of Accountancy (NASBA) have announced changes in both the format and content of the Certified Public Accountants (CPA) Examinations, the primary professional designation for accountants in the USA. The main structural change is that the examinations will now be held online and will be available four times per year. The content has also been modified to reflect modern skill requirements of an entry-level accountant. The change comes into effect in 2004... more>>

Automatic Tax Credit On Mortgage Interest?

Contributed by Mr. Carlton Barclay,
Current Affairs Committee Chairman, ICAJ,
For the ICAJ Current Affairs feature,
"Everybody's Business: ICAJ's Perspective"

Did you know that employed tenants obtain automatic tax relief? We, therefore, ask the question, why not a similar tax relief for persons paying mortgage interest? If you are employed and pay rent, then you may be aware that you can obtain automatic tax relief by requesting that a portion of your salary be paid directly to your landlord. This must be supported by a properly executed tenancy agreement between the landlord and the employer... more>>

The Necessity for Established Rules For Investment & Economic Growth

Contributed By Dennis Chung,
Member, ICAJ for the ICAJ Current Affairs Feature,,
"Everybody's Business: ICAJ's Perspective"

I have often thought of the potential Jamaica has for meaningful development. This idea has consistently been echoed by various commentaries. Ever since my awareness of current affairs, I have always heard references to Jamaica's potential for tourism, agricultural crops, reggae music, etc. This has led me to think about why we have not been able to realize this "much talked about" potential and why we always seem to be on the brink of a breakthrough but never attaining it. There is no denying that Jamaica is truly blessed with natural resources and a resilient people and could easily be first class in areas of natural competitive advantage... more>>

Accounting Rules & the 1990s Financial Crisis

Contributed By Dennis Chung,
Member, ICAJ for the ICAJ Current Affairs Feature,,
"Everybody's Business: ICAJ's Perspective"

Subsequent to Enron, questions were raised as to the possibility of a similar occurrence in Jamaica. The failures at the time were widely attributed to the American accounting rules (GAAP), leading to much debate about their adequacy. Proper accounting by itself would not have prevented the crisis, as inappropriate management has more to do with integrity and competence than rules. It would, however, have highlighted the problems early thereby ensuring that proactive solutions are implemented... more>>

Impact of Inflation on Pensions

Contributed By Dennis Chung,
Member, ICAJ for the ICAJ Current Affairs Feature,,
"Everybody's Business: ICAJ's Perspective"

There has been much talk recently about the expected inflationary outturn for 2003. The Bank of Jamaica expects that inflation will be in the region of 13%, higher than the single digit inflation projected at the start of the year. This should be of importance to persons who will reach pensionable age within the next ten years... more>>

Traditional Accounting & Information Technology

Contributed By Neville Robinson,
Member, ICAJ for the ICAJ Current Affairs Feature,,
"Everybody's Business: ICAJ's Perspective"

Financial statements cannot provide all the information that users require to make economic decisions but they show the stewardship of management for the resources entrusted to them. The quality of financial statements, according to International Accounting Standards 2002, is characterized by "understandability, relevance, reliability and comparability"... more>>

Towards Greater Efficiency

Contributed By Mr Dennis Chung,
Member of the ICAJ for the ICAJ Current Affairs Feature,
"Everybody's Business: ICAJ's Perspective"

I have heard on occasions persons in the private sector refer, both publicly and privately, to the inefficiency of the various government processes. The word 'inefficiency' seems to have become somewhat of a cliché for some people and is used freely to explain every situation. A recent experience I have had with two government ministries has led me to question the source of inefficiency... more>>

The Economy's Performance: An Accountant's Perspective

Contributed by Mr. Dennis Chung,
Member of the ICAJ for the ICAJ Current Affairs Feature,
"Everybody's Business: ICAJ's Perspective"

Jamaica's economic performance has been one of the most hotly debated topics over the past few years. Measurement of economic performance is similar to the way we approach analyzing a company's prospects, as many indicators can be compared to the ones utilized by businesses... more>>

Modernising the Tax System: The Need for "Group Relief"

by Mr Don Wehby,
Member of the ICAJ for the ICAJ's Current Affairs feature
"Everybody's Business: ICAJ's Perspective"

Following submissions by the Jamaica Stock Exchange, the Government decided to remove the double taxation of profits distributed to shareholders in May 2000. This has been viewed as a positive development and will ultimately lead to greater activity on the stock market. According to the most recent World Bank Policy Research bulletin... more>>