Wednesday, 18 March 2009

Accountants and other criminals

My apologies for an incendiary title. I don't really mean it of course. I think I have a slight case of hyperbole from Francine McKenna. Still, in this article at The Huffington Post, she points out that
The Big 4 public accounting firms haven't yet been asked the hard questions by governments, legislators, or regulators.
Which is true. She also points out that they share some of the characteristics of organised crime. Which, so far as the analogy goes, is also true. But the big issue is liability.
Governments all over the world are protecting and shielding the public accounting firms from failure under any circumstances, even in the face of repeated failure on their part... The firms and their partners ... are unequivocally self-interested.
As one would expect them to be. But the time for pandering to their self-interest is over. If they want to give opinions on accounts, then they should be liable for them. If they don't feel ready to take responsibility, then they should not sign off the accounts. Removing caps on auditor liability is a really easy way to dramatically improve the quality of audited financial statements.

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