A headline in the AFR reads “CPA paid $600k for advice arm report” which leads into an article on the fact that CPA has paid one of the Big 4 accounting firms $600K to provide a report that proved that the financial advice arm should be closed.
Considering firstly that there were a significant number of members, like me, who had originally said don’t do it, then secondly doing it and getting less than 100 partakers of the offer, and finally losing some $12.6M in the process of operating the venture, it would seem that the answer was somewhat obvious to the average man.
I must say I would love to see what ASIC’s reaction to me, should I choose to bill someone that sort of money, as pre-advice on something as obvious. On the flip side though and as a proud member of the Association of Independent Insolvency Practitioners (AIIP), it does actually demonstrate how cost effective, professional and responsive the advice we can provide actually is, but I digress.
Given the makeup of the Board of the organisation, one would probably not have considered it wrong had you presumed that the members of the Board already had the skills to work out the answer in the first place. Certainly that’s how great organisations were once built, knowledge, application, tenacity and stamina, to name a few traits! However it can, given the modern day tendency to opt for personal risk adversity, concede that the Board had to do it.
Accepting that though, on what form of audacity could it be constructed that there was ever that level of cost involved in forming such an obvious conclusion; as a spectator, I fear the fee had more to do with the monthly fee budget rather than the actual work required.
Regrettably this is not an isolated example, I remember another pearler when a liquidator paid a major legal firm in excess of $1M in fees to conclude that a negligence action would fail against APRA for failing to diligently apply the law.
Regrettably these larger firms are all part of the “sweet suite”, that group of firms that seem to basically get whatever they ask for (like the case of Network Ten, the Court appointed a supervising administrator who charged lower hourly rates overall, but the Court allowed them to charge at the same rate as the administrator which was higher) end up on all sides of an equation, and often write the solutions that will be applied back on others as a test of them. Their work seems to be applauded even when it defies common sense?
Ah yes! … There is my error: – that’s right, common sense has now been lost, I forgot; what we must strive for these days is actually “uncommon sense”; or is it possibly just political correctness? Not sure, my but I know my head is simply spinning!