Oh dear Ritchie, oh dear

Let me ask a question then that needs to be asked. Where were the auditors? It is true that auditors are not meant to detect and prevent all fraud. They are meant to identify material risk to the business. A potentially fraudulent business model, which is the nub of the HSBC accusations, is however well within the range of risks that I think any auditor should have identified.

Umm, what fraud? Are HSBC being prosecuted? No?

Then what fraud took place?

Yes, tax dodging took place, tax evasion even. But that’s not the same as fraud you see.

If you’re going to pronounce on the law you should try to get it right.

18 thoughts on “Oh dear Ritchie, oh dear”

  1. Twat.


    Why do auditors seem to make such a poor job of spotting fraud? One factor, says Richard Murphy, a partner at accountant Murphy Deeks Nolan, is a massive expectation gap about what auditing can and can’t do. Despite unshakeable general assumptions to the contrary, he says, auditing (like accounting in general) is a subjective, not objective, discipline representing an opinion, not a certainty.

    ‘Put five accountants in a room with the raw figures,’ says Murphy, ‘and they’ll come up with five different profit figures, all legitimate. Accountants and companies understand that, but regulators, users of accounts and governments want it to be black and white.’

    The basic function of an audit as currently practised is to confirm that reported transactions actually took place, not to root out dishonesty. Current thinking in corporate governance puts increasing responsibility for the latter on a company’s directors.

    ‘Deep down, every auditor knows he is on a hiding to nothing,’ says Murphy. ‘Every time he signs off a “true and fair view”, he knows that another view could be perfectly possible.’

  2. He starts from the position that all money belongs to the State.

    Money you are allowed to retain is therefore a gift from the State.

    Attempting to retain more than that is stealing from a benefactor.

    He sees tax avoidance as like mugging Santa.

  3. @Noel Scoper:

    It would be interesting to see what he says about that quote now.

    After his Damascene conversion he denounces his previous behaviour and comments (advising on how to pay your nanny in a tax efficient way, structuring of the Trivial Pursuit company etc). So he thinks his own activities were wrong in the past.

    But this is slightly different. The comment you quote seems to me to be a fairly sensible description of the role and scope of auditors. It is materially factually accurate and as such isn’t anything that the 2015 Ritchie would say.

    Did he receive a blow to the head sometime in the early 2000s? A hefty cheque from his union backers?

  4. How would the bank’s auditors be in any position to know, or even have any right to ask, whether the bank’s customers were correctly reporting their taxable gains to the relevant tax authority?

  5. @ SE
    Because in the Murphyverse, all Swiss banks deduct UK income tax at the customer’s marginal rate and remit it to HMRC. All HSBC customers who are not British residents then apply to HMRC to transer the tax deducted from their accounts to the tax authorities in their home countries.

  6. Makes you wonder whatever happened to Deeks and Nolan. I wonder at what point they’d had their fill ?. I’d gladly buy a few pints to hear their views on their ex-partner.

  7. @Worzel

    One, I think Deeks but not 100% sure, was Ritchie’s first wife. So the “other interests” Ritchie’s bio says was the reason the partnership ended, was him finding another missus at a quaker meeting.

  8. I suspect Ritchie had a mild stroke some time in the last fifteen years, perhaps without realising it. Most accountants have incredibly strong attention to detail and are good at thinking through the consequences of actions, whereas recent Ritchie is very poor at this. He still knows the accounting world’s jargon (though even there he gets confused), but he has lost the ability to think. Stroke victims are famously quicker to anger too, more irritable; that describes him perfectly.

  9. So here’s the question:

    Looking through TRUK’s accounts for 2014 he declares turnover of 72k.

    However, he then declares later that he received (at least) 92k of income.

    Is it his responsibility as a director to make sure those accounts are correct, or is it the auditors? He seems to be unsure.

    Not only that. By declaring profits based on only 72k of turnover, he has essentially paid himself less. What happened to the other 20k of turnover? Has he paid himself this – if so avoiding (or evading?) income tax on this as it hasn’t been declared. has his LLP avoided or evaded tax?

    Unsurprisingly, my post on his side asking as much has been deleted for “boring repetition”. Not at all for making him look like a moron.

  10. Andrew M

    I’d agree with that diagnosis – he has had a few health issues of late so it is not inconceivable he might have suffered from a stroke in the past – he is around the right age and I cannot imagine his blood pressure (even with a wife who is a GP) is the best. Would explain a lot.

  11. Yes considering what we know of his way of thinking and acting, he’s going to be at risk of several things.
    Not that I’m so concerned over his health that I’ll simply accept whatever he writes….

  12. I’ll be honest , I don’t any hidden £20k. I would say if I did. But since I don’t I’ll leave the libel to him.

  13. @ Andrew M

    In the “Grants and Income received” Section.

    Some of that income is deferred, so there isn’t a 20k gap, but as I understand it (haven’t looked at accounting treatment of such for a very long time) you normally split said income over the period the work is being undertaken. Nor has he explicitly said how much in total is being deferred – which essentially without audit would allow him to shift income around between tax years to “smooth” or simply reduce profits in a given tax year.

    That 92k is only the materially declared income – there is other money coming in from his consultancy fees, broadcasting fees and book sales (chortle).

    Is he doing anything wrong? From these accounts it’s impossible to say, but it’s very easy to cast doubt.

    And that is rather my point.

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