Here's one from Floyd "the Barber" Norris on your favorite profession (and how they are resisting any attempt to keep the books honest). Enjoy, O frigid cartilaginous one:
nytimes.com
July 28, 2000
FLOYD NORRIS
A War the Accountants Will Lose Even if
They Win
ARTHUR LEVITT, the chairman of
the Securities and Exchange
Commission, wants to end his term by
enacting new rules to increase the
independence of auditors from their
corporate clients.
"This is," Mr. Levitt said near the end of
a long day of public hearings, "a cultural
change we are talking about."
Auditors are the only profession
enshrined in the nation's securities laws.
If you want to sell stock to the public,
you don't have to hire a lawyer or an
investment banker, but you do need an
independent accountant. Mr. Levitt fears
that auditors are not sufficiently
concerned with assuring that they are
seen as independent.
Many in the accounting industry bitterly
resent Mr. Levitt's latest moves, which
would force the accounting firms to stop
providing some consulting services they
now sell to companies whose books they
audit. They say those services make
them more familiar with the company,
and thus able to do better audits. And,
they say, there is no evidence that such
relationships have led to bad audits.
"Today the rules say we must be
independent in fact," said James E. Copeland Jr., the chief executive of
Deloitte & Touche, in an interview. Mr. Levitt is pushing rules that
demand "independence in appearance," he said, adding that "this
Caesar's wife quote is absurd." That's the one that says some people
must be above suspicion.
There probably never was a golden age of accounting independence.
Back in 1957, Leonard Spacek, the legendary managing partner of
Arthur Andersen, was warning that "the profession's existence is in
peril" because it was not showing enough independence. He complained
that the accounting principle-setters of that era "yielded quickly" when
companies complained that a new standard would cut their profits.
"Proper accounting principles in this case were not even discussed," he
moaned. He warned that it was dangerous for auditors to be perceived
as advocates for their clients, rather than impartial fact finders.
Many things have changed for the better since then. The Financial
Accounting Standards Board now sets accounting rules and has exhibited
backbone.
But accounting chief executives talk a different language than Spacek did.
They are very confident that the public has confidence in them, and point
to high stock prices as evidence that investors trust the financial
statements they certify. To the extent there is a perception that they lack
independence, they blame the S.E.C. for raising the issue. You get the
impression everything would be fine if Mr. Levitt would just shut up or go
away.
Three of the major accounting firms -- Andersen, Deloitte and KPMG
-- are determined to fight the new S.E.C. proposal. They are lining up
allies in Congress and preparing to go to court. They hope to delay
action until a new president can appoint a new S.E.C. chairman.
They may win that fight. But such a victory would be pyrrhic. Highly
publicized resistance to rules that are described as seeking to promote
auditor independence will be remembered when -- as will surely happen
-- there is another case of an audit gone awry, particularly if the auditing
firm got far more money from consulting relationships than it did for doing
the audit.
The industry should seek a compromise, perhaps one that lets auditors
continue to do more information-technology consulting than the S.E.C.
seems to want, but with safeguards and fuller disclosures. But for now,
there may be too much anger to allow such talks even to get under way. |
