Passing the buck … Directors argue they cannot be expected to pick up every item in the accounts. Illustration: Michael Mucci

Anyone seen that billion dollars lying about? Could have sworn it was here somewhere. Umm, just check down the back of the couch. No, not there.

Better check the jacket pockets … no luck. Floor of the car … not there either. Golly. Someone must have borrowed it. Should have made a note of that. Darn.

The corporate regulator’s case against the board of Centro for failing to classify an urgent $1.1 billion debt in the company’s accounts is the best corporate theatre around at the moment – if that kind of thing takes your fancy.

It goes to the heart of corporate accountability, of the blatant inadequacy of the audit profession, of the role and the performance of company directors. What are they there for, if not to make sure that shareholders were in the loop when it came to a looming and grisly corporate train wreck?

For the past few weeks, Centro directors have contended in their defence that they can’t be expected to pick up every line item in the financial statements. “To find the non-executive directors wanting in the discharge of their duties would be to embrace a counsel of perfection,” thundered their QC, Alan Archibald, in the Federal Court in Melbourne on Tuesday.

Hardly. Missing a subtle change in accounting treatments for some exotic derivative instrument is plausibly imperfect. But a $1.1 billion current liability when global credit markets were cratering? Not quite so plausible.

In closing submissions the next day, lawyers for the Australian Securities & Investments Commission denied the regulator was setting impossibly high standards. Rather, they claimed directors fell short of a minimum standard of boardroom participation.

“They [directors] all knew there was about $2.5 billion in short-term debts, and all they needed to do was to apply their minds to that line [current liabilities],” said ASIC’s silk, Mark Derham.

It’s the old story. The passing of the well-worn buck. Directors argue they can’t be expected to pick up every item in the accounts. That’s what auditors are for, they say.

Centro is counterclaiming against its auditors, PricewaterhouseCoopers. Naturally, the auditors will contend they could only rely on what the executives and directors told them. It’s the hoary old chestnut. Never in the history of the profession has an auditor fessed up, “Got me there! The reason I get paid a million dollars a year is to not rock the boat”.

We’re not singling out Centro and PwC here. OZ Minerals forked out $60 million to settle two shareholder class actions only last week, laying to rest allegations that it had misled the market by not disclosing a large debt, due shortly, amid the financial crisis in 2008.

Then there was Allco Finance Group. It too, along with its auditors KPMG, overlooked that $2 billion of its $6.1 billion in debts were due in short order, as markets were crashing in 2008. It was picked up by my colleague, Stuart Washington. A journalist no less. Enough said of auditors!

Centro directors can then, to some extent, count themselves unlucky. They are the sacrificial lambs for the system. While ASIC hammers home its case, the Allco mob and myriad others get away scot-free. The regulator has neither the will nor the resources to prosecute every case of boardroom oversight.

It simply has to make an example of the most glaring breaches of fiduciary duty. And the facts of the Centro case are that, in mid-2007 as global credit markets were turning to ice, big short-term debts were rocking share prices violently.

Centro’s solvency was at stake. And $1.1 billion is, let’s face it, a biggie, even for a company as buccaneering and recklessly expansionist as this one.

Neither though can directors, as a class, be condemned. It’s always tempting, from the armchair, to sledge the good old boys’ club for raking in lavish fees, rocking up to 12 board meetings a year and knocking back some aged claret while executives run wild.

As one formidable director of long-standing confided to your humble scribe this week, as in any field of human endeavour, boards were staffed by both the dedicated and the indolent. Roughly half of them were devoted to their job and performed it with integrity.

Indeed, in strict legal terms, directors’ fiduciary duties are so onerous as to be almost impossible to carry out. Yet in real terms, and in view of their pay, the rate of prosecutions for boardroom breaches is so low as to render the wailing from lobby groups comical. Boards spend more time fretting about reprisals from litigation funders and class action lawyers than the regulators.

So the system will probably change at some point, perhaps to something more like the German model where boards are advisory, their potency residing in the power to hire and fire the chief executive.

It’s not the role of this column to lament the shameful social injustice of regulated industries. Still, in economic terms, gambling is pretty useless. And so it was that every Australian should sit up and take notice of the numbers published in The Economist this week.

Australians shredded almost $1300 per resident adult in 2010 on the punt. Singapore was the only nation near us, at less than $1200 a head – lost that is, per resident adult. Britons and Americans blew less than a third of that.

The bronze medal for boneheadedness went to the Irish with just shy of $600, less than half our losses. Then Canada, Finland, Italy, Hong Kong and Norway.

Fascinating stuff. Even the gaming lobby itself concedes that a large chunk of its revenue derives from problem gamblers. Given the social costs, the economic benefits of gambling are dubious.