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Gas and Go September 24, 2015

Posted by Audit Monkey in The Joy & Pain of Internal Audit, The State of the British Nation.
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The VW fake emissions saga is rumbling on. Of course, there has been the inevitable media frenzy with every columnist in the Western world commentating on the wrong doings. One of my more favourite columnists, Allister Heath, formerly of CityAM and now Business Editor at The Telegraph has waded in. The full article can be found here.

To summarise Heath’s article, VW has a peculiar corporate structure with Trade Union participation and a tiered Board hasn’t been conducive to good outcomes; if anything the tripartite arrangement with the firm, the Unions and the German government has allowed the firm and politicians to conveniently ignore emissions regulations. The inference is, with a pro-market or right-wing government none of these shenanigans would have occurred. In one word, ridiculous. Corporate scandals can still occur with good governance arrangements. Unfortunately, with any profit driven firm, entrepreneurs and employees are always going to look for ways to increase margin. Sometimes this will be legitimate, by upping prices, looking for competitive advantage by producing an innovative product, e.g.Iphone, or less so, by gaming the rules. Step forward one Tom Hayes who was convicted in relation to LIBOR rigging earlier this year. My contention is that emissions rigging could and would have occurred in a well run firm. Let’s face it, what firm wants to be regulated?

While I was reading The Telegraph, another headline caught my eye. Apparently the NHS is losing over ¬£5bn a year due to Doctor and Dentist fraud. Again, the article can be read here. Jim Gee from NHS Counter Fraud Services suggests “taking place across areas such as general practice, dentistry, prescriptions and payroll”. You don’t say. I started my audit career in the NHS and it is well-known that dentists can defraud the system by doctoring (geddit?!!) the declaration signed by the patient for a different treatment than that provided, i.e, one at a higher rate and request reimbursement from the Department of Health or Health Authority, etc. This has been going on for decades yet have adequate controls put in place to prevent this? Of course not. Disheartening isn’t it?

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