Buhlmann's Corner

Corporate Governance tests auditors

Last month, corporate governance struck hard at the German auditors’ organization. The self-regulatory oversight body had changed the voting rules, and already there was a landslide in the election results. While the “Big Three” – the world’s largest auditor of the “Big Four” is still upcoming in Germany – had so far set the tone, now the smaller firms are “in power” for technical clarification and political lobbying.

Sure, it’s good if people can switch both auditors and audit brands painlessly (as I first called for after a bank failure in 1977). And certainly it is right for certification work not to be disturbed by anything else. But ever-cheaper certification cannot improve its value! The auditors deserve pity anyway. If they save a company with timely pressure, no one talks about it. Conversely, if something goes wrong, they are always partly to blame. Onlookers forget time and again that certification is not a seal of approval but only attests legality (even of a march into bankruptcy). Whoever’s going bankrupt in line with statutory requirements can claim certification, but if you’ve been successful with research money you often have no chance, for lack of so-called “survival probability”.

If unworldly Europeans now cut back the consulting business, then the same thing will happen as does in AGM decisions: the voting outcome gets decided in the back room and not in healthy investor interests; but uncertified, it’s bound to be dirt cheap. Anyone now expecting the second certification (also formerly known as P-certification) to produce anything more than charges should not look to France but instead dimly remember that Deutsche Telekom had exactly this double certification in its wild old days. Fat lot of use it was to the investors!

The Osram-IPO was cancelled - an opportunity for corporate governance! Give the shareholder his property and give each Siemens share a proportion of Osram shares as dividend in kind, so the shareholders accept it and give expression to their joy at the ensuing Osram capital increase. Thus, in this Siemens will set new signs and follow successful models (such as Lanxess).