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Audit routines, gas pipes, chickens and lawyers

"JUST as it is impossible not to taste honey or poison that one may find at the tip of one's tongue, so it is impossible for one dealing with government funds not to taste, at least a little bit, of the King's wealth."

With this quote from Kautilya's Arthashastra begins a chapter on accountability institutions such as the CAG (Comptroller and Auditor General) in Governance Reform for Vision India, by B. P. Mathur, from Macmillan (www.macmillanindia.com).

The CAG brings out numerous reports and spots many cases of financial irregularities, waste and misuse of public funds; but very little action gets taken on the findings, rues Mathur. He attributes this to the lack of power in the hands of the CAG to enforce action. As a result, "irregularities persist year after year and delinquent officers get away even after committing serious lapses."

Mathur states, "A large number of public servants and organisations violate financial rules and regulations relating to drawal of pay, travelling and medical expenses." He informs that as per the system that prevailed right up to 1976, "if a government servant made unauthorised drawal of allowances, AG (Accountant General) would issue a retrenchment order to the treasury officer." Not so these days, laments the author.

"The Bihar fodder scam was facilitated as the treasury officers suppressed vouchers through which money was drawn and did not transmit them to the AG, thus preventing compilation of accounts and conduct of audit," recounts the author, who has worked as Deputy CAG. Shockingly, annual accounts of many State government companies are in arrears, sometimes for as long as 10 years, as one learns from the book.

The book has important suggestions on reforming the bureaucracy, streamlining privatisation, strengthening the PAC or the Public Accounts Committee, and meeting the corruption challenge. Helpful literature.

Pipeline economics

A THUMB rule is that pipeline gas is cheaper for distances of 3,000-4,000 km for onshore, and 1,000-2,000 km for offshore, according to Natural Gas in India: A Reference Book, from Gail and Infraline, distributed by Bharat Book Bureau (www.bharatbook.com). You need to factor in variables such as gas quantities, type of terrain, water depth and so on, reminds the book, when discussing the economics of import through pipelines.

"As almost all the fixed costs related to the pipeline material are proportional to the pipeline diameter, there is significant opportunity in pipeline projects to improve the project economics by increasing the pipeline diameter," the book explains. While the incremental steel cost is proportional to the pipe's diameter, incremental flow is proportional to the square of the diameter, if you remember your school math.

"The use of cross border pipelines to carry gas over long distances is a relatively simple and well-proven technology," assures the book. Thus, more than the technology, the pipelines have to contend with political relationships between countries. For instance, a feasibility study for Iran-Pakistan-India pipeline launched in early 1995 could not progress for want of permission to perform offshore surveys in the waters of Pakistan, notes the book. The alternative to avoiding Pakistan would traverse `areas of rock outcrops, steep slopes and canyons'. Installing in water depths of 1,000 metre imposes "a limit on the diameter of the pipeline."

Overall capital costs for a single LNG (liquefied natural gas) project can be in excess of $2 billion, notes a section titled `LNG Economics'. The cost goes to $4 billion if you include "a gas fired power plant of 2,000 MW." The delivered cost of LNG varies from $2.55 to $3.65 per MMBtu, that is million British Thermal Unit, a measurement of energy consumption. (A BTU is the amount of heat required to increase the temperature of a pint of water (which weighs exactly 16 ounces) by one degree Fahrenheit, informs www.energyvortex.com). "The closest source of LNG to the West Coast and Southern India could be Arun in Northern Sumatra, Indonesia," indicates the book.

Add fuel to your finance knowledge!

Chicken and egg

THINK of the world as a chicken coop, writes Tim Templeton in The Referral of a Lifetime, from Tata McGraw-Hill (www.tatamcgrawhill.com). "We can go searching for customers like they were chickens, running around trying to sell our products to every chicken we corner. If we catch one, we can have a good chicken dinner that night, but then we have to go through the process of finding and catching another chicken." If you are lip smacking already, the book has an alternative suggestion: "If we build a relationship with those chickens, take care of them, plump them up, continue to maintain the relationship with them and be referred to every chicken they know — we'll have omelettes for life. No longer will we have to find a new chicken every day."

A book you should better find first, if you are frenetically running after chickens, because the author guides you on `the networking system that produces bottom-line results'.

Law is values crystallised

INDRA Deva's Sociology of Law, from Oxford (www.oup.com), can make you wish for a similar work on accounting too. Because the book compiles contributions and excerpts arranged under six major themes, namely, functioning of the legal system, the legal profession, law and religious identity, law and the disadvantaged groups, societal role of judiciary, and law and social change. "Sociology deals with the study of social relationships, values, norms, and attitudes. All of these form the foundation of law," writes Deva. "Law is the structured and crystallised form of norms and values. Its study can, therefore, provide a clue to the societal values that are really enforced but remain hidden from the public eye," he emphasises.

"The legal profession no longer offers the most honoured and profitable work that can be attained in India," rues a chapter on the development of the profession. "It no longer draws the best students, and it no longer dominates the social and political life of the country. The monopoly it had on the leadership of the country for over a century is now gone. In a way the rest of society has caught up with the profession."

Can that be said of accountants too?

BooksOfAccount@TheHindu.co.in

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Audit routines, gas pipes, chickens and lawyers
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