Archive for December, 2011

The masters of the word and the masters of the numbers and the no-go-area between project evaluation and project audit

Friday, December 23rd, 2011

 Here is a short poem about words and figures, first in the original language (in Russian), then in a translation:

„В оный день, когда над миром новым /Бог склонял лицо свое, тогда

Солнце останавливали словом, /Словом разрушали города.

А для низкой жизни были числа, / Как домашний,  подъяремный скот,

Потому что все оттенки смысла / Умное число передает


In those days when the world was new /and God bowed his face, in those days
the sun could be stopped with a word, / 
and with a word, cities were destroyed.

For the lower ranks of life, there were numbers, / like cattle under the yoke,

because all these nuances of meaning, /prudent numbers, they will give. “

 Nikolai Gumilev

 The above indicated poem of Nikolai Gumelev made me think about the interrelation between “word” and “figures”. Hopefully, most auditors would agree that figures should serve us. We should not be the slaves of figures, but their masters! In a broader sense, non-profit accounting itself is an attempt to establish the priority of the word over the logic of capital markets, isn’t it? Is it to exaggerated when I say:  non-profit accounting is an attempt to force the figures back into the yoke? Okay, this is a bit too abstract, probably.

I do not know how it is in your country. In my country it is like this: there is a clear demarcation line between project evaluators –the masters of the word, and financial auditors – the masters of the numbers. What do I say – it is not a demarcation line, the area between the realms is simply a no-go-area.

The masters of the word are usually proud of their communication skills, and as a rule of thumb, they expose allergic reactions, when it comes to figures. The masters of the numbers are usually proud of the analytical competences, and as a rule of thumb, they expose allergic reactions, when it comes to “soft indicators” – other might talk about increases or decreases of “human rights awareness” or other foggy concepts: As long as this asset would not fit into a balance sheet, the typical auditor would probably ignore it.

My colleague Thomas Werner showed me an audit programme called “resource management audit”, a technique developed in India. The programme puts an emphasis on comparing figures with the project aims. How wise! , I thought. It is so stupid separating project evaluation from the project audit. What is needed in non-profit accounting, is a project evaluation that uses financial audit skills – like cattle under the yoke.

With the lines of this small poem, I wish the readers of this blog a Merry Christmas and all the best for the New Year!

Frank Fabel, CPA 

P.S. It would be nice to hear your ideas and comments on the interrelation of project evaluation and project accounting. For comments, you may use the “comment”-function below. Or simply write an e mail to

Saturday, December 17th, 2011


The problem of trust into figures from another sovereign

Friday, December 16th, 2011

It is thrilling if you can link international hot news to accounting issues. Here is an example: Reuters announced that

More U.S.-China audit meetings possible in October
Regulators from the United States and China could meet again in October in Washington to continue July’s talks about joint inspections of audit firms in China. “We’re still at the stage of sharing information and building trust,” said Mike Starr, a deputy chief accountant at the Securities and Exchange Commission. “Our goal is to have an agreement by 2012.”

 “U.S. regulators may meet their Chinese counterparts in Washington this October to work on protocols for joint inspections of Chinese audit firms, the head of the main U.S. audit watchdog group said on Wednesday.”

You can read the orginal Reuters article on

The underlying problem of this Sino-American initiative is very much the same as the problems discussed in our  How to create trust in figures across cultural borders? How to find a similar interpretation of numbers in different countries? How to define similar standards of integrity and honesty? The problem is hot because “problems with reverse mergers” have raised concerns at the SEC, as Reuters writes. Automatically, audit problems of scope limitations, difficult risk assessment and different fraud definitions arise – all these are topics that are well known to the readers of this blog.

And this is where the difficulties of an international newsletter start. I have put together some quotations from the Reuters article for you:

“They (the Chinese) are working with us to try to create a regime that enables joint inspections to go forward the way they are in Europe,” Doty told Reuters …. But Doty believes some of China‘s concerns are beginning to melt as they realize that a “global economy puts a lot of limits on national sovereignty. “We are long past the time when China could say that there’s a good reason for not having any international inspection of audits based on vague principles of national sovereignty,” Doty said. “They’re not saying that now.”

I was a bit shocked by the “they, the Chinese” and “we, the Americans”-tone in the article. I, a child of the French revolution, had to take a deep breath in order to ignore the hurt coming from the words “vague principles of national sovereignty”.  How much deeper this hurt must be for the sons and daughters of the boxer-insurrection, I thought.

I mean, it is not only like this that the SEC has problems concerning trust with firms based in the People´s Republic of China, it is also that the People´s Republic of China has a problem with trust in US-state obligations, isn´t it?

Here is an excellent example of getting some feedback from “them”:  The BBC recently (on 23rd August at 12:32) broadcast an interview with the advisor of the Central Bank of China, in which this expert gave advice to the US government. You can find the interview at Professor Li Dau Kvei explained in very polite words that “the current political set-up in the West may not be the most suitable system dealing with financial and economic problems”. Now, the children of the Boston tea party probably have to take a deep breath.

Frank Fabel, CPA, MA

Imprint / Privacy Policy

Friday, December 16th, 2011

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Google +1-Schaltfläche – Datenschutzbestimmungen

28. Juni 2011

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