When it comes to governance and accountability, the feds should practice
BEFORE they preach. Recently leaders in the accounting profession
announced the creation of an independent public oversight body to ensure
the quality and integrity of audits conducted by Canadian accounting firms.

In short, this body will audit the auditors. This move stems from the
seemingly endless stream of accounting and corporate disclosure scandals
that have rocked the markets in recent months.

The list of companies - think Adelphia, Enron, Global Crossing, Sunbeam,
Xerox etc. - in the throws of bankruptcy, under regulatory scrutiny,
engaging in questionable accounting practices, or restating financials
is long. As a result stock prices tanked, creditors were stiffed, and
employees have been laid off holding millions in worthless stock options.

In fairness, most corporate titans are not party to such activity, but
confidence in corporate institutions has eroded. So the creation of an
independent, non-governmental body is welcome. While the Department of
Finance praised this new body, a news release from Minister John Manley
insisted that further action - five specific steps - must be taken:

1) Strengthening Corporate Governance. Companies in Canada must be seen
to be governing themselves in a responsible and principled way in the
best interests of shareholders.

No disagreement here. Now if only the federal government would hold
itself to this same standard. Wasting $40 million annually in
sponsorships, and writing off hundreds of millions of dollars in
corporate welfare loans is not in the interests of Canada's shareholders
(taxpayers).

2) Ensuring Management Accountability. Senior executives must ensure the
veracity and completeness of their public disclosures, including their
financial statements.

Another common sense idea. Sadly Ottawa has booked $7.7 billion in arm's
length foundations. And it consistently underestimates federal tax
revenues while ratcheting up mid-year spending.

3) Improving Financial Reporting. Canadian companies must provide
investors with complete, accurate and easy-to-understand information.

This is a no-brainer. However, the last two spring economic updates (May
2001, June 2002) from two different finance ministers were devoid of
numbers, projections, etc. The gall of Ottawa to offer counsel on
financial reporting is astonishing.

4) Toughening Enforcement. Individuals and companies that violate the
public trust must face punishment that is consistent with the
seriousness of the violation.

Absolutely. But hopefully Canada's corporate police won't follow
Ottawa's example when it comes to punishment: Denmark already has an
ambassador.

5) Enhancing Further Credibility of the Audit Process. Investors must
have confidence in the independence and integrity of companies' external
auditors.

Yes they must. But taxpayers have expressed their confidence in the
government's external auditor: The Auditor General. Now if only federal
Liberal MPs would cease their efforts to undermine and discredit the
integrity, independence and merits of the AGs work.