Copenhagen The price of gas is 60% higher in a poor country like India as compared to that of the USA. The Americans start their cars 15 to 30 minutes with their remote car keys before they enter the car to ensure comfortable temperature. And in India, we put off the ignition at traffic lights to save gas where the average waiting time is 60 seconds!! So the conclusion – COPE ’N HAGGLE
As the autumn is setting in, nature is showering extraordinary colours on the earth. The trees are changing colours – some are still green, whilst others are red, orange, yellow, purple, blue, etc. It’s like the rainbow has descended on earth with one big difference – the rainbow stays for a little while, whereas this feast of colours will remain for a month & a half.
Another spectacle which cannot be missed is the beautiful flowers. One cannot make out the difference between the artificial & real flowers. The real ones are like the artificial & the artificial like real. One needs to thank God for firstly creating the beautiful flowers & secondly for giving man the brain to copy him.
It’s now 6 months since we have been in Milan. When we arrived, the branches of the trees were struggling to carry the weight of the flowers & leaves. Now, it is autumn. It seems branches allowed the flowers & leaves to fall as they are delicate & would not be able to withstand the winter. Thereby in spring, they can come back with vigour. One important happening in this period is that we bought a Jaguar. The credit goes to my sons who kept on advising me about which car to buy. The 2 criteria which Jaguar clearly passed were – the best brand & more important, that it is now a part of Tata brand which is Indian.
As we live in Milan, last Sunday we happened to visit a very beautiful town named Stresa around 40 kms away. Stresa is on the banks of a lake & around a few kms from Switzerland. On reaching Stresa, we were pleasantly surprised to know that the First Italian Grand Prix for OFF SHORE Class I World Powerboat Championship was about to begin! When an Indian hears about racing, the obvious name that comes to mind is that of Vijay Mallya! AND WHAT A PLEASANT SHOCK WE HAD - WHEN THE RACE STARTED, ONE OF THE PARTICIPATING TEAM WAS FROM KINGFISHER!! There were no other thoughts in mind other than saying - WE SALUTE YOU VIJAY MALLYA.
Monday, September 28, 2009
I took up a new job in Milan, Italy. Prior to this, I was working in Bahrain. My wife & I landed in Milan in April, 2009
As we got out of the Malpensa airport of Milan, we were greeted with bright sunny weather – the winter was ending. On our drive from airport to the residence, it was pleasant to see greenery around.
We soon realized that learning Italian would be necessary because with English we could barely manage conversation. It is inconvenient to communicate at slow pace. The Italians apologized for their English & would make all efforts to try and communicate including taking help of others to help us out. The first word that I learnt in Italy was ‘ciao’ – pronounced as ‘chow’. It is used for saying ‘hi’ & the same word is used for saying ‘bye’.
After coming to Italy, as per Italian rules, it is necessary to get a document called ‘invitation’ to work. The same has to be stamped by the Italian Embassy in Mumbai. Hence, I visited Mumbai in June. The visit to Mumbai was around the time the Bandra Worli sea link was inaugurated. But we missed the inauguration by whiskers. I was interested because not only it is a construction feat & beautiful structure, but because it is constructed by a company which I worked for – HCC.
At present, trees & flowers are blooming & the rivers flowing with clean water due to the melting snow from the Alps. We landed here in the right season. We visited the F1 showroom which is magnificent. We saw many places in Italy – balancing between the work schedules during Omkar’s (my son who was here for 3 weeks) stay.
We get a large variety of sweets which are very good – pastries & ice-creams. The pizza has thinner base as compared to what we are used to, but the taste is good.
We have not found many Indians here. As it is Indians are few. In addition, one of the factors restricting meeting people is the cost of travel. Petrol is € 1.2 per litre plus the toll tax takes its toll.
August is a month of vacation here. So, everyday is a Sunday (in Middle East context – a Friday)! The system is that though this holiday is part of one’s annual leave, it is availed by everybody at the same time. In India, it’s impractical since even when this practice is not followed; the bus, train & air tickets get booked 3 months or even earlier when the booking starts. But this raises a fundamental question – do Government, Corporate bodies, etc. need annual leave like humans keeping aside commercial considerations?
We received our cargo after almost 5 months. We attempted to calculate the difference between the cost of transportation & cost of goods transported – but could not come to any conclusion. One more important piece of statistics – the amount of freight + charges from Bahrain to Milan was considerably less as compared to the same from Milan airport/seaport to residence!
We located the ISKCON centre & visited it for Janmashtami. It is about 75 kms and 8 euros (toll) away! The place is beautiful – green, vast, clean, quiet & serene – carrying the hallmark of Italy.
We missed the Ganeshotsav festival. When we left Mumbai first time in 1993 (I was in Muscat), we started missing festivals. If I have to grade the festivities it would be Bombay – best, Muscat – better, Bahrain – Good. My apologies for grading the Muscat festivities better than Bahrain, but that is firstly because it was a five day festival & secondly there was a dedicated community hall.
Our Italian classes have started. A young, beautiful Italian lady teacher comes home & teaches Seema (my wife) & me. Fortunately, she did not go on August holiday. We soon plan to talk in Italian at home so that there are 2 advantages – we will hopefully learn the language faster & we would have lesser quarrels!
Talking about learning languages, I remember an instance where I attended Aditya’s (our son) parent-teacher meeting in Muscat. The Hindi teacher announced – ‘I request parents not to teach Hindi to their children’ (this was mainly because majority Indians in the Middle east are from South India).
The internet has been of immense use. To the extent that we are able to see Indian TV programs. Especially, I consider myself lucky not to have missed Pt. Hridaynath Mangeshkar’s SA RE GA MA (Marathi). In my opinion, he deserves Bharat Ratna for his contribution to Indian music.
As banks/financial institutions fold/merge across the globe, debates on the causes are raging. Corrective measures are being taken in the form of takeovers, etc, but preventive measures are slow: the symptoms are known but the diagnosis incomplete.
While talking of preventive measures, one issue that needs to be analysed is the role of auditors. How is that the auditors did not find anything wrong? All these institutions (those that went under and those that are floundering) are reputed and big. They would mandatorily have had external as well as internal auditors.
So, either the auditors' advice was disregarded or the auditors failed to find out the root cause of the trouble. The damage is so widespread, that one point which comes out clearly is that there is a need to look at the auditing processes adopted and advocated in this murky scenario. Without going into the roles and responsibilities of external audit, let us look at internal audit. Today the difference between the functions of internal audit and external audit has become blurred. Internal auditors tend to carry out audits like external auditors. The risk factor assigned to a particular business unit in the company depends on two factors: the risk associated with the business as such (which is what external audit also finds out), and the other factor as to who mans these business units. In case the unit is manned by procedure abiding, cautious and strong team players (e.g. involving internal audit department for issues noticed by them during their day to day running of business) in that organisation, the unit faces less risk. The internal auditor needs to assess this perspective of risk.
It cannot be disputed that it is difficult to assess the second aspect, but the lack of awareness of the need to evaluate this risk too needs rectification. It is important to take the pulse of the brains behind the businesses and not focus only on systems, procedures, loopholes, etc. This can be accomplished only by the internal staff, i.e. internal audit.
Often, the internal audit function is outsourced. Also, if there is internal audit set up in the organisation, it is sometimes manned by people from external audit background. When this happens, the internal audit department is run like an external audit firm. It is undoubtedly difficult to take a pulse of the brains behind the businesses. However, some steps could be taken. Firstly, there should be awareness that there is something equally important that needs to be monitored, apart from systems and loopholes. This awareness results into small steps on a regular basis from the management side, such as involving the internal audit department in all important meetings/events (such as a launch of a product) whether related to audit jobs or not. This helps in the auditor being apprised of the happenings. He can offer recommendations and, most importantly, he gets a chance to gauge the minds of the participants. It is important for an auditor to analyse why, how, when and where an employee performs a particular action/transaction, irrespective of whether or not it fits into the parameters of the accounting records. Another factor that helps in this pulse reading exercise is the longevity of the audit staff in the company. History of a person/process/activity helps immensely in deciphering intentions. Normally, corrective measures have some traces of preventive measures in them. Similarly, in this situation one of the causes which surfaced is the incentives or bonus systems prevailing in the sector. Close interaction by HR department with the internal audit department would be of great help. For example, information on a disgruntled employee or an employee earning abnormal bonus will be of help to internal audit in the form of leads. Due to the influence of the external auditors on the internal audit function, a gap is created in the formats of internal audit plans. Internal audit function is too wide to be able to be covered in a plan -- both at the macro level as well as the micro level.
Plans are to be prepared and adhered to. Though it cannot be disputed that plans are important, insisting that a certain audit is to be completed within a certain time casts a massive toll on the quality of audit work. External audit time is always being converted into man hours, billing and money. The main focus of external audit is on systems, risk, etc, which is more likely to be completed in the allotted time as compared to carrying out audit in an investigative manner -- trying to find out the underlying reasons for expenditure rather than seeing whether it is properly accounted. Also, the internal audit plan cannot be adhered to when a non-planned event is unearthed, and this happens quite often. Any time-wise provisions in the plan are likely to disrupt the plan. The dynamic nature in which it is essential to run today's businesses has a major impact on the plan and, worse, on the internal audit function. New activities are started, old closed, and existing ones modified at a pace that internal audit plans cannot cope with. A plan prepared in advance cannot encompass these changes. The pressure of audit committees to cover audit as per plan is most likely to result in non-coverage of these areas. Being new in nature, these activities need more internal audit attention than the planned ones. Plans are, therefore, necessary to ensure that no area is missed out and to evaluate performance of the internal audit staff: time taken versus points unearthed. The influence of external audit on internal audit has further increased due to the Institute of Internal Auditors' guidelines wherein internal audit function has to be independently reviewed by an external agency (normally an audit firm) once every five years. The intention of this guideline is commendable, but it runs the risk of reviewers mixing external audit processes with internal audit.
In light of the current financial upheaval, if we go back about two years, it is possible one may find that when the sub-prime lending commenced and increased with one of the intentions of making profits quickly, the internal audit departments were busy fulfilling their existing audit plans and ticking check-lists so that the respective audit committees could be kept satisfied. The need to keep a tab on the pulse of the managers' intentions and the modus operandi adopted must have got lost in this routine. The need of the hour, therefore, is to bring the pendulum to its equilibrium so that the lopsided swing towards only theoretical audits is brought to balance taking the human aspect of audit into recognition and taking into consideration the dynamic business situations essential for today's growth/survival needs of any organisation in auditing.
The author is an Indian national, currently working in Bahrain. The views expressed here are personal. The article was first published on Rediff.com
