Audit Fund – Should there be one?

[stocksontheblock]

With the number of companies hitting the wall over the past 18 months or so, and possibly a few still to come, it seems that any recourse to get something back (if any) – through administration or liquidation, has to also contend with auditors who are typically paid out of the accounts of the companies they administer/liquidate, further reducing any possible payment to shareholders/creditors in that company. This can be further exacerbated when a BIG company hits the wall due to a number of ‘doggy’ dealings and the auditors could spend years finalising the company’s position.

I’m not suggesting that this is treated as a milking cow by the audit firms, yet I think this could be levelled at some, yet where a company that could go bust, has as much to lose as say ABC Learning, BNB, and some of the property funds an Audit Fund should be used to cover ‘reasonable’ costs of an audit firm and not payment direct from the firms they are investigating.

I know this could impose a cost on business, yet should there be an insurance amount paid by a company to an externally administered and run fund that audit firms apply to for payment when investigating companies that have collapsed?

Should this happen? Should it be set in law? Could it work?

 

[gooner]

With the number of companies hitting the wall over the past 18 months or so, and possibly a few still to come, it seems that any recourse to get something back (if any) – through administration or liquidation, has to also contend with auditors who are typically paid out of the accounts of the companies they administer/liquidate, further reducing any possible payment to shareholders/creditors in that company. This can be further exacerbated when a BIG company hits the wall due to a number of ‘doggy’ dealings and the auditors could spend years finalising the company’s position.

I’m not suggesting that this is treated as a milking cow by the audit firms, yet I think this could be levelled at some, yet where a company that could go bust, has as much to lose as say ABC Learning, BNB, and some of the property funds an Audit Fund should be used to cover ‘reasonable’ costs of an audit firm and not payment direct from the firms they are investigating.

I know this could impose a cost on business, yet should there be an insurance amount paid by a company to an externally administered and run fund that audit firms apply to for payment when investigating companies that have collapsed?

Should this happen? Should it be set in law? Could it work?

As someone who does not invest in dog companies that are likely to go broke (HIH being a notable exception) I fail to see why the safe, boring lowly geared companies that I invest in should pay for the rampant speculation of other companies requiring administrators and liquidators.

So, IMHO, not a good idea.

 

[stocksontheblock]

As someone who does not invest in dog companies that are likely to go broke (HIH being a notable exception) I fail to see why the safe, boring lowly geared companies that I invest in should pay for the rampant speculation of other companies requiring administrators and liquidators.

So, IMHO, not a good idea.

I see your point, yet I guess the same thing could - at some stage - of been said about such companies as ABC Learning and BNB etc.

Just asking the question ... that's all

 

[gooner]

I see your point, yet I guess the same thing could - at some stage - of been said about such companies as ABC Learning and BNB etc.

Just asking the question ... that's all

BNB surprised me (though thankfully did not hold0, but ABC? Fast Eddy as CEO? Might have been respectable in some parts but not Gooner's investment portfolio

 

[Real1ty]

Should this happen? Should it be set in law? Could it work?

No
No
Yes

Buyer beware.

 

[Julia]

As someone who does not invest in dog companies that are likely to go broke (HIH being a notable exception) I fail to see why the safe, boring lowly geared companies that I invest in should pay for the rampant speculation of other companies requiring administrators and liquidators.

So, IMHO, not a good idea.

No
No
Yes

Buyer beware.

I agree 100% with the above.

Stocks, I can see the basis for your suggestion but think it would be completely unfair for reckless investors in crap companies or people who have ignored obvious signs to get out to be subsidised by those who are more responsible/cautious.