By IRENE CHAPPLE
Public relations is now a major part of the job for KPMG's international chairman, Mike Rake.
As head of one of the world's four global accounting giants, Rake is constantly facing the media in an attempt to regain the credibility of a shattered profession.
Rake's stance on behalf of
auditors is unapologetic.
Mistakes have been made, and "excesses", as he calls them, have been curtailed.
Rake is referring to 2001 when giant energy company Enron began to implode amid allegations of fraud.
It and other United States corporates such as WorldCom are now under Chapter 11 bankruptcy protection.
Enron's accounting firm, Andersen - found to have shredded auditing paperwork - has since been vanquished by its own improprieties.
KPMG itself hasn't escaped the cleanout. Four partners are currently being sued for fraud over the treatment of Xerox's accounts between 1997 and 2000.
The Securities and Exchange Commission has alleged the partners manipulated a $3 billion "gap" between actual results and those reported to the public.
Rake says KPMG did the "right thing" with Xerox, by calling attention to its accounting practices.
He also says it is the treatment of a complex accounting tool that is under investigation, not fraudulent behaviour.
KPMG has also suffered financially over the last year, its operating profits dropping 21 per cent to £212 million ($599.5 million) and restructuring to cut 1000 jobs.
Last year, Rake's own income dropped from £1.7 million £1.45 million, although that was then boosted, by the sale of KPMG's consulting arm, to around £1.6 million.
But while investigations - including that of the KPMG audit - drag on, the domino-like revelations of corporate greed appear to have slowed.
And people like Rake are speaking out in defence of their profession.
Rake believes recovery, in terms of public perception of auditors, may take up to five years.
It could be quicker, he says, but the public - and the capital markets - must realise the issues were blown out of proportion.
"There have been real excesses," says Rake, "but the perception has become that everyone is in excess ... we need to re-establish the belief in accounting firms."
Rake says such severe collapses are cyclical, and points to the 1990s' love affair with the telco sector.
When the boom times crash, reform is the immediate response.
"But you have to look at the responsibilities of the various people involved," says Rake. "The auditors, the actuaries, the credit agencies and the press ... are they all doing their job well?"
Rake's point is that, ultimately, blame must be placed before individuals. If they are fraudulent, over-regulation would not prevent such behaviour.
And auditors, he reminds, are not responsible for picking up their fraud.
"Auditors report on historical events, they do not cause failure ... There is a huge misunderstanding in the marketplace, and the biggest single misunderstanding is that an audit is there to find fraud. It is not and never has been."
Rake accepts changes need to be made to accountants' regulatory regimes.
But he warns over-regulation will be detrimental to business and recovery of the capital markets.
"I've had major companies tell me recently that they have had four-day board meetings that were meant to be about strategy but ended up being about corporate governance. They then had to call extra meetings to talk about strategy ... that is a serious concern."
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