Tuesday, December 25, 2007

Is it really surprising?

Dear Colleagues

Corruption ... that is grand corruption ... seems to be a central feature of modern society, just as it seems to have been in ancient history. Powerful people trading favors seems to have been a central aspect of ancient history, and it is not very different in the modern world.

Getting this under control and keeping it in check has been a challenge. Thoughtful people have recognised from ancient times that ordinary people were a part of society and should have some role in society beyond merely being laborers. The ancient idea of democracy was based on this idea.

It is also a very long time since it was recognised that the King should not have absolute power and total control of the money in the realm. While the concept of the King taxing the people was not removed, the absolute control of these revenues was moved to the Parliament and its use controlled by Parliament. This was the origin of the Single Treasury Account and the Budget Authorization for spending control ... now several hundred years old.

Modern corruption is not much different from ancient corruption. Powerful interests trading favors ... usually ... often ... at the expense of ordinary people and the society as a whole.

Modern corruption is no easier to control than ancient corruption. The benefits of corruption are enormous. A politician who can change a law in favor of a corporation can facilitate enormous corporate profit ... so is it really surprising that the corporate world would give (substantial) favors to the politician ... and is it really very surprising that society as a whole can scream and shout as much as it wants, and nothing changes.

Most of the trading in favors goes on quietly, with nobody paying very much attention. From time to time someone will stumble on the reality and the newspapers will pick it up, write stories about it, some superficial changes will be made ... but at the end of the day, nothing very much has changed.

It is disappointing that though information technology has improved in power by a factor of thousands, if not millions ... accountancy is less effective at the beginning of the 21st century than it was in the early part of the 20th century. How can this be? The answer lies probably in the power of modern information technology that facilitates the loss of control of resources as much as it facilitates the control of these resources.

Broadly speaking ... in the corporate world there is an internal culture that supports the control of the corporate resources. This is a deep culture ... and serves the corproate organization well if not society as a whole.

Government has a different culture ... a different structure ... and the strong control of resources has never been a big part of the culture. Much more resources are a talking point in a political debate rather than being the subject of rigorous accounting. The systems of accounting are driven by disbursement control and not very much be performance accomplishment ... and audit and investigation is often too little and too late. Huge errors are found years later ... what on earth was going on so that they were not found while the errors were going on?

Corruption is so much easier when the accounting is sloppy. Corruption is much more difficult when the accounting is strong, when accountants are doing their job, and audit and accountability analysis is done on a timely basis.

It is not at all surprising that there is so much corruption when there is so little good accounting. Not surprising at all.


Peter Burgess
The Tr-Ac-Net Organization

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