Magazine article Financial Management (UK)

Editorial Comment

Magazine article Financial Management (UK)

Editorial Comment

Article excerpt

Knowledge is power. What has become clear over the past few months, however, is that the use of power without adequate knowledge can have disastrous consequences and can end up putting that power in jeopardy. The quality of the knowledge behind the decision to go to war in Iraq will obviously, remain a hot topic of debate in the lead-up to the US and UK elections, yet it should also provide a lesson for leaders in business. Ignorance may be bliss, but, as new regulations pile up, managers who do not understand their markets, their responsibilities and their legal obligations are also likely to end up spending a lot more time with their families.

The next regulatory hurdle needs to he jumped on 1 January 2005, when the deadline for reporting under international accounting standards comes into force (page 18). Y2K-style horror stories declaring that x numbers of organisations have no idea whether their systems can comply with IAS are likely to be exaggerated, but, as usual, there will be some truth behind the sensational headlines. Some companies will undoubtedly struggle to get into line. The important thing is to make sure that your firm is not one of them.

Once the right knowledge is available to the right people in the right places, it must still be used properly. Ken Farrow, detective chief superintendent at the economic crime unit of the City of London Police, is one person who is keen to make all financial managers more knowledgeable. He also hopes that firms which become aware of fraud, both potential and actual, will be more willing to share their knowledge with the police (page 14). …

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