A question of trust

As the various pressures increase on businesses the integrity of financial reporting has never been more crucial.

With companies and individuals desperate to achieve profit targets the potential for abuse may prove to be too much of a temptation.

It is important that systems are in place to prevent misreporting and in worse case scenarios fraud and these systems should be reviewed and rigorously checked.

It is hardly surprising that “independent” auditors have now been called into Banks in Spain to verify the true value of the property portfolio which form such an important element of the banking systems assets and capital structure.

At the same time the current events at JP Morgan underscore how vulnerable institutions are if their personnel choose or are allowed to camouflage the extent of their exposure to unanticipated market movements.

Nobody has devised a fail-safe system which affords 100% comfort but in many instances a closer objective scrutiny would have given sufficient warning to have averted a train wreck.