Making Rules

A gem by Lon Fuller legal philosopher 1902-1978.

Moral tale of King Rex and eight ways in which he fails to make laws:

1) Fails to make rules, so everything is decided on a adhoc basis.

2) Does not publicize the rules

3) Enacts retrospective laws

4) Incomprehensible laws

5) Contradictory laws

6) Rules that require conduct beyond power of affected parties

7) Introduces frequent changes

8) Fails to achieve congruence between rules announced and official action

In our daily lives sometimes we make rules which we ask others to follow and sometimes follow rules made by others.

May we make better rules !

Audit – is it relevant now?

“…the government is controlled and influenced by individuals who are like all individuals – they are selfish. It is naïve, if not exactly delusional, to expect them to put public interest before their own.”

An extract from Economics: The user guide by Ha-Joon Chang

Similarly auditors are individuals and first and foremost they will look after their own interest. The people via the parliament have to force them by law to look after the interest of the nation and communities their corporate clients work in.

Recent corporate failures have again brought to the forefront the question and relevance of Audits.

From the very beginning of our initiation in our accounting careers we are drilled the importance of Independence. But in our day to day training we see things far removed from the ideal world of books.

We have to ask the question what is the purpose of an audit?

Presently the purpose is to add respectability to the fiction called Annual reports made up by hard pressed accountants employed by the corporates to make the company accounts look its best.

Auditors avoid asking difficult questions because

  1. a) They lack knowledge – as competitive bidding has pushed the remuneration too low thus auditors cannot spend adequate time to understand company operations.
  2. b) Profit motive – They accept low priced assignment in the hope of selling other services to the clients. Finance directors are fully aware of this, as many of them were formerly in Auditing racket themselves, and exploit it to the fullest.

Thus we get a scenario where auditors are rubber stamping any fairy tale clients present it to them.

What is the solution?

  1. a) Audit threshold to be sufficiently high as last year done by EU to make the auditing worthwhile for the client and users of Audit reports.
  2. b) All audits allotted by a national Auditor like National Audit office in the United Kingdom or Comptroller and Auditor General Office in India.
  3. c) Audit fee fixed as per some criteria like turnover, industry etc. or some combination of it.
  4. d) Auditors only doing auditing. No other services could be provided by them. Something like a Glass Steagall Act.
  5. e) Major Corporates and companies of national importance audited by the National Auditor directly.


If all else fails better to abolish audit rather than continuing this falsehood.

Example of SDLT overlap relief

Leases attract Stamp Duty Land Tax (SDLT).

Sometimes a new lease is signed for the same property before the old lease expires, example when a lease is extended.

In such cases a relief called Overlap relief is available to avoid double taxation. A better back ground to overlap relief is given in SDLTM16010.

Given below is an example of calculation of this overlap relief with an spreadsheet attached which may help tax practitioners.

Current lease details:
Start date            14th Dec 2009
Lease term         15 years
End date              13th Dec 2024
Rent                      £85k + VAT = £102k


New Lease details:
Start date            31st Jan 2017
Lease term         20 years
End date              30th Jan 2037
Rent                      £110k + VAT = £132k

Below is the screen shot calculation of the SDLT payable.
To download the excel file click here – SDLT Overlap relief calculation