Article July 29, 2002 Issue

When INVESTING, put GOD first

By Tony Lovett

The collapse of Enron and WorldCom (in Australia it was the major insurance company HIH) has sent major shock through the business and investing world. That these collapses followed serious flaws in accounting disclosures, seemingly sided and abetted by world-class auditors, has added to feelings of consternation and anxiety.

Does the answer lie in stricter government regulation and supervision? Should rules be tightened, penalties made severer? That is what has been happening over the last 300 years. As far back as the early 17th century, it was investment in tulips! Tulips became the height of fashion, everyone wanted bulbs, and prices skyrocketed—then the inevitable crash occurred. It was in 1720 that the first stock market crash occurred—known as the South Sea Bubble. There were others—the Mississippi Scheme at about the same time.

Over the years, governments of the day have been attempting to prevent similar catastrophes by legislation—by increasing disclosure requirements, by tightening investment rules, by licensing financial advisors, and by increasing penalties. While much of this legislation has improved corporate governance, it has also increased bureaucracy, red tape, and the cost of doing business. Yet the problems continue.

About the author

Tony Lovett is a fellow of CPA Australia and of the Chartered Institute of Secretaries and Administrators. He is a registered liquidator and auditor, and has practiced as a CPA in rural New South Wales and metropolitan Brisbane, Australia for over 40 years.

Send a comment to the editors

NEXT IN THIS ISSUE

Article

Betrayed in business, Sustained by PRAYER