Conrad Black’s one-time globe-spanning profile has faded in recent years…

His Canadian visibility now is mostly confined to his regular opinion column in the National Post, notable for its style-challenged unreadability and for its barely qualified assessment of Donald Trump as a great American President (“ Is there any sane person who in the dark and quiet of their bedroom in the dead, vast, and middle of the night would not prefer Trump…”). It’s long been known that Black has an axe to grind against Canadian securities regulation (which certainly has done him no personal favours) but it was a bit of a surprise that he chose to devote a recent column to the Canadian Public Accountability Board, in layman’s terms the body that “audits” the Canadian auditors of public company. Here are some extracts:

• The portentous title of this organization, which governs the accounting profession in Canada, rightly incites fear of an effective reign of terror visited upon accountants. Among the learned professions, accountants have managed more successfully than lawyers, architects, medical and academic doctors, and the serious clergy to swim like fish in the sea of the people: proverbially bespectacled and unexceptionable men and women in grey suits. But they, too, have their secrets and their shortcomings. I cannot forget that for most of the first decade of this century, a company of which I was the controlling shareholder was driven into bankruptcy with the vaporization of the investments of thousands of people in every province of this country, because of the avarice of one of our principal accounting firms, sheltering under the protection of an implacably ignorant (and questionably motivated) judiciary…
• … To judge from the CPAB’s report for 2021, it has the twin objectives of tormenting the four large firms — sitting like a great and angry hen on top of them and micromanaging their businesses, while also, in a perfect spirit of egalitarianism, inflicting the same paternalistic attention on as many of the smaller firms as possible.
• …In 2021, only two of the four major firms met the CPAB’s target for quality management systems assessment. The four big firms are: PricewaterhouseCoopers, Deloitte, Ernst & Young and KPMG. One of those firms “missed the target related to talent and resource management and one firm missed the target related to oversight.” Any moderately commercially experienced reader may judge the level of intrusion and pettifogging that would be necessary to hold one of these large firms deficient in the management of talent and resources. I have conducted a moderate amount of research into this and have found that, in practice, the CPAB’s decisions are virtually unappealable — everything is in the hands of the chief of the inspection team and that person’s authority is practically unlimited. This gives the individual in question powers equivalent to those of an American federal prosecutor, who may threaten any parties with indictment unless they produce evidence useful to the prosecution’s case, in exchange for non-prosecution and with a guarantee against any charge of perjury. The result is the infamous 98 per cent conviction rate in American criminal cases. Canada is a notoriously gentler country than the United States, and it is inconceivable to me that any group of Canadian accountants could be as abusively authoritarian as the American prosecutocrcy. But this degree of unilateral authority vested in anyone is worrisome. There is considerable unease over the CPAB in the accounting profession, and although it must be credited with the legitimate desire to promote and maintain high professional standards, no one should exercise this level of authority in this vital an area without an effective mechanism to assure equitable enforcement standards.

Black concludes, in ringing fashion, that “better safeguards should be adopted by these professional regulators to ensure reasonable access to equitable treatment by their members. Private-sector tyranny is preferable to public-sector tyranny, but all tyranny is odious, and in this society, it is avoidable and no one is well-served by it.”

All tyranny is odious! Maybe he should take a closer look at the inclinations of his buddy Trump. To be honest, I don’t generally take too much interest in CPAB’s activities. Still, once you clear away the bombast, Black’s comments do intersect with some concerns I expressed here recently about the audit profession’s direction and prospects, in the wake of several highly-publicized but, in their details, underwhelming ethical lapses. At the time I suggested that “given the well-established general awfulness of auditing as a human discipline, especially at its lower echelons – the ego-crushing, time-pressured, psychically under-rewarding grind of it all – it’s hardly plausible to think the machine won’t regularly at least sputter” My view then was that “if the effect of current regulatory actions is to make the rule book even longer and duller, then the real problems with audit will likely just continue to grow.” Since then, various other sources seem to confirm declining interest in entering the accounting profession. At some point soon, it seems to me, the expectations placed on audit and on the poor souls who carry it out, will have to loosen up, as a matter of practical and economic necessity. Whether CPAB will evolve to reflect that necessity remains to be seen…

The opinions expressed are solely those of the author