U.S.A. prosecutes our white collar criminals for us

[Denny]

Given the nature ofhte rip-off schemes perpetrated to fleece Bay ST. (and some Wall St.) investors of their coin over the years, how is that the Americans are the only ones who seem to give a care for trhe stock investor.

Once again today, it was the U.S. SEC, not our OSC, who laid charges against some former Nortel execs. In both accounting and law enforcement, Canadian investors are treated as meat for the Bay Streeet wolves.

Let's not forget the BreX guy who just got off the hook by our court system here, he was just found to be an incompetent liar, not a crook. But, he now owns the Caribbean mansion, whereas some of the Bre-X investors were skinned alive, albeit with some greed on their part too.

[geoffrey]

Once again today, it was the U.S. SEC, not our OSC, who laid charges against some former Nortel execs. In both accounting and law enforcement, Canadian investors are treated as meat for the Bay Streeet wolves.

I can't speak much for law enforcement, but I can speak to Canadian accounting standards.

What would you like changed? An audit in Canada is as rigorous as a U.S. audit... done by equally qualified professionals. U.S. GAAP and Canadian GAAP are comparable and don't really offer any more room for fraud either way. Canada's move to IFRS over the next few years should bring us to a higher level of reporting accountability and standardization than the U.S., who are relucant to adopt the international standards.

The bottom line is that auditors can only audit the numbers and processes, managers need to be accountable at the end of the day. Incompetent management will destroy your bottom line regardless of all the checks and balances you put in.

When I take a look at a company to invest in, beyond all the normal financials, I also take a long look at the MD&A. It's there you'll find hints towards the management's commitment to shareholders and their competencies.

Here is Deloitte's statement on BCE, typical of all annual reports:

To the Board of Directors and Shareholders of BCE Inc.

We have audited the accompanying consolidated balance sheets of BCE Inc. and subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the related consolidated statements of operations, deficit and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

With respect to the financial statements for the year ended December 31, 2006, we conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). With respect to the financial statements for the years ended December 31, 2005 and 2004, we conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of BCE Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with Canadian generally accepted accounting principles.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 7, 2007 expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

So, at the end of the day, management is accountable. All the audit and fraud prevention and internal controls won't stop every criminal. Considering how many thousands of companies are publically listed, I'm going to say the accounting firms and law enforcement are doing a good job... very few frauds ever get to Enron size.