Shatter This Global Accounting Oligarchy

Sunday Business (London, England), January 20, 2002 | Go to article overview

Shatter This Global Accounting Oligarchy


SHAREHOLDER, I cannot tell a lie, I did it with my little shredder." Not even a Mark Twain-crafted version of Washing-tonian frankness can save the accountancy profession's lock on its dripping roast combination of audit and consultancy practices now.

The "he did it in Houston with his little shredder and we knew nothing" version peddled by Arthur Andersen's new boss, Joseph Berardino, may have done for Andersen's credibility already. The reputations of the rest of the Big Five have been tarnished in the process.

Time and a congressional investigation will tell whether senior figures at the firm knew or not. It certainly spells the death-knell of the Big Five monopoly of seats on the gravy train that statutory international accounting requirements have provided for decades.

In the wake of the Enron fiasco the cry is up from the usual suspects - opportunist consumer groups, populist politicians and heavy-handed regulators - that tighter regulation is the answer. On 17 January, Harvey Pitt, chairman of the US Securities and Exchange Commission (SEC), called for a new private-sector regulatory board with "real teeth", saying: "The potential loss of confidence in accountancy firms is a burden our capitalist system cannot and should not bear."

He is barking up two wrong trees, as befits someone whose New York law firm represents the interests of the Big Five. The loss is not potential: it has happened; and solutions are more likely to be found in making the market work better rather than in more controls.

Tighter regulation of a system of supervision already riddled with conflicts may postpone the next Enron scandal - burying it more deeply, more likely, as companies and conflicted auditors learn to avoid the bear pits they dug for themselves in this debacle. Can any company with 881 offshore subsidiaries (Enron had, among others, 692 in the Cayman Islands plus 119 in the Turks and Caicos, presumably not purely because its executives liked sun and sand) be assumed to be playing with a straight bat?

The annual audit of public companies' accounts is an international statutory function. Shareholders appoint the auditors, companies pay them. Much pious piffle is talked about the auditors' independence being sacrosanct, but what shareholders will reappoint an auditor who shouts "scandal" from the rooftops, sending stock values crashing, or downgrading bond ratings? "Thank you for your services, here's the cheque. Call us to account again next year" is not the likely response, but it is the one the present system expects.

Calls for the compulsory rotation of auditors on a seven-year basis are no answer. Would an auditor finding a raft of off-balance-sheet items have an incentive to squeal in year one? Who was prepared to point out that the UK's saintly GEC ran accounts that did not pass the US's stringent corrupt-practices test, forcing the now-vilified Marconi to make its US buys in cash, not paper?

To keep the fees rolling in accountants have tried to live with the conflict. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Shatter This Global Accounting Oligarchy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.