David Wighton writes this morning in The Times of how badly the auditing firms are performing. The Audit Inspection Unit publised their annual report today and have discovered that one in ten of the Big 4 accountancy firms’ audits have been of a low standard. Unfortunately, this proportion is not improved once the next tier of accountancy firms is analysed.

Over half of the smaller firms were diagnosed as requiring significant improvement. There’s not much point in listing those in the second tier but it is understood that they are relatively well known firms. In fact, in the £10-50 million turnover range of companies based in Greater London alone, these firms audit more than 90%. Using the AIU’s analysis, this means that over 500 firms have had a substandard audit.

This isn’t really a surprise to Dalton Byrne as profit recovery is one of the key services on offer. By looking at accounts over the past couple of years and really drilling down into the numbers, a discrepancy of 0.1% of turnover (£1,000 for every £1m traded) is usually the smallest amount found. Therefore, if there are 500 firms who average between £10-50m turnover and have had poor audits, there could be £1.5 billion of unaccounted funds.

And all Dalton Byrne looks for is that which is owed to the client.

Does London really have £1.5 billion owing to the private sector in the mid-size companies? What can they do about it?

The thing is, if Dalton Byrne cannot find any discrepancies, there is no charge. So get in touch.

Knocking management methodologies, rigour or even best practices off the top, creativity has clearly appeared as the single largest driver of commercial progress at the moment.

As the global economy is still far from recovered from the depths to which it has sunk in the past eighteen months, corporate chiefs are aware that they need to move in a smart way not so much to grow but, in some cases, to merely stay alive. The crash was caused by numerous factors but has left us with the hangover of an unprecedented boom and such a history of growth that many leaders are just not familiar with fighting the fires of recession. Many of the management schools of thought (which have generated millions in training fees) may look great on paper, but if everyone followed a doctrinal approach, then the problems would either continue to reappear in another guise.

Thus bosses are thinking creatively to weather the ongoing squalls. We are a long way from coming out of the recession with a firm footing. Where we are, however, is in an unparalleled position to do something different as we are in circumstances hitherto unseen. Being creative, overcoming adversity with imagination, not even acknowledging the box when you start thinking – these are the approaches which will define the champions of this era.

It’s a great time for opportunity. The question must surely be, if you are a boss, are you maverick enough to outsmart the situation?

This is the prevailing view of many business leaders around the world as well and they hope that such measures – 25% cuts across the majority of departments in the UK public sector – will lead to a lack of waste and effective growth. Although the cuts are in the public sector, the private sector will no doubt be affected strongly and that’s not just because a significant proportion of work is contracted out from the public sector.

There are some who disagree. Robert Johnson, Director and Senior Fellow at the Roosevelt Institute in New York and Washington, posits that austerity is the wrong way forward and merely demonstrates the disproportionate power of the financial sector. Recovery is fragile at the moment and we are languishing in the fallout of a crisis created largely by the financial sector, a sector that was created to serve yet now seems to lead.

See the whole video here.

Time will tell but what is necessary now is a number of skilled and even-handed experts to come into the public sector and make realistic cuts. They will cause discord but since this is the way the government has decided to play things, that’s where the work is going to be.

Although it wasn’t possible to speak due to the acoustics, mingling progressed and everyone took the time to thank us for organising it.

We will organise another event at the end of the summer but now it’s a case of working out the ramifications of the budget and working towards more client challenges.

George Osborne is due to announce the first coalition budget later this month. Therefore, let’s get together at 6.30 pm on 21st June at Bangers ( www.http://www.davy.co.uk/bangers ) to predict what he might be offering.

From now on, we want to provide a ten minute presentation on a relevant subject at our events. To kick things off, we are going to have a talk on business development through various channels.

Do come along and bring a colleague so networks can be widened.

Please confirm your attendance to me at a.boyd@daltonbyrne.com.

Look forward to seeing you there.

We provide improvement to these companies at no risk to them. We do this by agreeing a fee for our work and, if the results of our work do not bring at least three times the cost of our fee, then we refund the fee. Simple as that.

How do we do it?

6 days work over three months, broken down as the client wishes. Strategy, direction and focus – the tenets of what we deliver.

Why can we do it?

There is a lot of experience that we have gained over the years that can help the smaller companies. These often balk at paying large fees for external help as it impacts their cash flow. So we aim to provide a mutually beneficial package – the client wins and we win.

We are willing to stake our time, effort and reputation on it.

The markets have rallied and there appears to be a positive response all round the new government. We believe this is because there is an answer, as opposed to a policy i.e. at least we know who’s going to be running the country. Nobody has announced the depth of the inevitable cuts in detail but everyone appears to be shaping up for a very rocky road in the coming months, if not years.

If the Liberal Democrats bring more to the table than just the desire for electoral reform, there is the possibility that governmental decisions will take longer. However, they should pass through Parliament more easily as they should be reflective of a broader electorate. Nick Clegg has displayed elements of immaturity in his political maneuvering, but also an acuity that provides reassurance. Neither he nor Cameron have held cabinet positions and so their education will be in the furnace. There is no real alternative so we will have to take that as a given.

The public sector is going to receive a lot of attention over the coming months and the spending review should highlight some glaring over expenditure. Cameron mentioned that those who can, should, so we are starting to see the announcement of what may become a far more responsible and obligated society rather than the entitled and selfish one that emerged during Labour’s tenure.

We feel that this will lead to a period of instability out of which a stronger economy will emerge and therefore a stronger country. This is naturally good for business yet they should be in a stronger position already. Companies generally don’t have the option of running up unmanageable debt so the last 18 months have seen some significant cost saving and reduction exercises. Those firms that concentrate on servicing the public sector (and this has kept a number of consultancies alive since Q4 2008) will have to redesign their offerings. Those that have skimmed off the fat and are ready to take on the new paradigm will have potential for decent pickings.

The brouhaha over the election has proved one point – fluidity and uncertainty are here to stay. What was offered one week might not make it onto the agreement the next. Companies need to adopt a similar and flexible approach. If not, they will stumble.

What does this mean and what will be the impact in the commercial world?

One of the idiosyncrasies of the British electoral system is that even if Brown has the smallest number of seats in the House (unlikely), he has first option on forming a government if it is a hung parliament. He will have to look to forge strategic partnerships with either the Conservatives (equally unlikely) or the Liberal Democrats (possible but difficult).

If this doesn’t work, then it is likely that Cameron will have to build a coalition to form a government. This is likely to be with Clegg and the first motion that will be on the table will be one of electoral reform. This is not because the Liberals are passionate about representation per se, it’s just it’s the only way they can be included in any government due to their perennial third placing in the polls.

Electoral reform will cause enormous upheaval in government and a coalition will, due to it’s partisan elements, prolong the passing of new bills. However, it is worth noting that all three main parties define their policies through focus groups and that they all tend to veer towards the same manifesto.

Once the maelstrom of reform is sorted, there will be a far more collaborative approach to government and the tribalism of the past century should start to dissipate. This will take time and discomfort.

The net result of this shake up for the business world is that scant attention will be paid to commercial needs and priority will be afforded to public sector reform. The private sector will be expected to continue and save itself in the meantime, whilst the inevitable cuts in the public sector will make more unemployed and therefore spending less as consumers.

It’s going to be tough and there is no easy solution. We have fed at the trough of cheap credit for a decade and it has made our business practices more slack than they could be. The past eighteen months has necessitated some drastic measures in most companies – the next will see if those measures are robust enough to weather the coming intransigence of government.

It’s going to be tough and some innovative approaches will be necessary.

For months, the press have harangued Cameron for not producing policies and he has dodged the bullets by alluding to a form of preparation that is flexible and responsive to a situation. Therefore, any ideas that might have been put together six months ago might be out of date and he appears to have been reticent to aligning himself to issues which might be no longer relevant.

Brown has thumped the tub a number of times about how he has planned to spend his way out of the economic mess in which the country sits. Alas, his spending plans have also included the usual double accounting standards by which he has swerved responsibility for so long and, frankly, do not add up.

Clegg has struggled and struggled to get any recognition. The main light in the Lib Dems has been Vince Cable but he started to show cracks in his policies when he was harangued for announcing a new tax at their conference. The potential for cohesion disintegrated as many wanted their views heard and few seemed to grasp the concept of one voice.

But now we have a week to go and there seems to be little between the three in terms of policies. All have veered to the centre in terms of approach, which allows Farage of UKIP to claim you couldn’t get a cigarette paper between any of their ideas. Too true.

What is also apparent is that the issue of the economy is being resolutely dodged. With debt increasing by £167 billion per year and rising fast in total to the £1 trillion mark, where are the rest of the cuts that the parties have claimed will happen? None of them has identified more than 25% of their proposed savings and so we are left, roaring down into the last few days, with no clear idea on what any of them will do.

If this were a company, it would be in severe trouble. The FD would have been out on his ear a long time ago and the MD would be either looking for a new job or looking forward to a life of golf. The last debate is about the economy and this is the last chance the three have to go head to head and justify their existing claims and explain the rest of their plans.

Alas it will probably be more about personality. If that is the case then we will probably get a hung parliament and that will lead to less drastic action by the ruling body. More stagnation will lead to less growth which will prolong the impact of the recession.

The public sector is firmly in the firing line for cuts but not one of the three key parties is willing to divulge the extent of the inevitable cuts.

Time to show some mettle, I think.

The three parties have been gearing up for the inevitable for some time. We have had the first televised debate between key members of the parties when the Chancellor of the Exchequer was on stage with George Osborne and Vince Cable.

There is a lot of uncertainty in what is coming. We all know that the economy is far from being stable, in fact it is becoming increasingly clear that the economy was far from stable with all the debt propping it up. However, all the parties are proclaiming intent to resolve this issue.

The electorate do not seem to be any the wiser, despite their proclamations. So how do you solve a problem like this?

The first action is to define and acknowledge the problem. Neither party is keen to admit that they will have to implement some stringent measures which could result in people losing their jobs. But any 10 year old with a grasp of mathematics would be able to tell you that if there is more going out than coming in, something has got to be done.

Secondly, they must agree a plan with a capable person at the helm. There is fear that the unknown of Osborne and Cameron is not strong enough to address the legacies of Darling and Brown. Cable and Clegg can be perceived to represent too small a section of the electorate and there appear to be innumerate new parties springing up out of anger at the way our country appears to have been mismanaged.

Once this plan is in place, it must be communicated so that people understand the reasoning behind some of the measures and they can prepare as well. Avoid the spin, the mud-slinging, even the historical claims, just announce and engage as the effects will be widespread and deeply felt.

Prepare to be flexible with the plan and admit to errors. The country is not impressed with the politicians and there is a need to rebuild the faith in elected officials. Engaging with the public effectively and honestly will contribute to building a collaborative approach.

Credit the results to those who have worked for them. This shows leadership above petty differences.

Finally, be prepared to step out of the way to allow the new paradigm to take hold. Be the link between the broken old and the dynamic new, not the hangover.

Sounds pretty similar to turning round a company but keeping it simple currently seems beyond the grasp of the political classes.