Academic journal article Journal of Accountancy

A New Accounting Culture

Academic journal article Journal of Accountancy

A New Accounting Culture

Article excerpt

The following is adapted from a speech made by AICPA President and CEO Barry C. Melancon at the invitation of the Yale School of Management. Mr. Melancon spoke before a group of business professionals and representatives of the media at the Yale Club in New York City on September 4, 2002.

This is my first chance to speak to an audience outside the accounting profession since President Bush signed the Sarbanes-Oxley Act. That law contains some of the most far-reaching changes that Congress has ever introduced to the business world. Its scope is large. It contains fundamental reforms. Many of its standards are high. And its penalties are stiff. It included many elements the profession supported--and yes, some that we opposed.

Now that it has been signed into law, our position is unequivocal: We will work to implement it and to rebuild the faith of investors who depend on us for information critical to the capital markets.

But let's recognize the challenge ahead: Reestablishing the perception of the audited financial statement as a clear picture window into a publicly traded company will not be achieved purely by legislation or regulation.

No, the lead role must be played by all members of the profession. We must reach back to our core roots which earned us enormous respect as trusted advisers. We must reassert the heritage that made the accountant the professional in whom Americans confide their most confidential financial information and to whom they turn for honest advice.

WE MUST RESTORE OUR MOST PRICELESS ASSET: OUR REPUTATION

All of us who are privileged to be leaders of our profession have the responsibility of preserving a legacy of honor and integrity for future generations of CPAs. We owe it to all who preceded us and all who will follow us. We can afford no tolerance for those who strayed from the commitment to put the public interest first. We must do better and we will.

What is needed is not just reform of the accounting laws, it is a rejuvenated accounting culture, both internally in corporate finance offices and externally in audit firms. The culture must build upon the profession's traditional values, such as rigorous commitment to integrity, a passion for getting it right, a commitment to rules--not just to their letter, but their spirit, and zero tolerance for those who break them.

These values are the commitment of all of the 350,000 CPAs who are members of the AICPA across this country. We are determined to restore the image of the accounting profession and rebuild the legacy we will pass on to the next generation of accountants. We're committed to the same goals that Congress envisioned when it passed the Sarbanes-Oxley Act and that the president articulated when he signed it.

We are committed to rebuilding confidence in the financial markets and their institutions. We're committed to dramatically reducing the risk that future investors will fall prey to the kind of financial malfeasance that characterized Enron and WorldCom. And we are committed to something else as well restoring pride in our profession. For us, it's personal.

The revelations of financial abuse were a traumatic blow to everyone in the accounting profession. It has been painful to the nearly half of our members who are corporate employees, who serve as the financial conscience for thousands of corporations in America. It has been painful to the vast body of CPAs in public practice, CPAs who are not by and large involved in auditing publicly traded companies, but who concentrate on providing good advice and quality services to individuals and small businesses. Let's not forget that small businesses make up roughly half of our economy. They are America's engine of economic growth and job creation and they depend upon their CPAs for expertise and trusted advice. In a business world that seems to grow more complex every, day, small business people need to turn to a trusted adviser to put complicated issues in context. …

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