On June 19, 2002, the General Accounting Office (GAO) released to the public its "Report on the Accounting Profession." The document was prepared at the request of Representative John Dingell, the ranking minority member of the House Energy Committee. He asked for a report during post-Enron Congressional hearings.
The purpose of the GAO's report was to determine the status of recommendations made in 2000 by the Panel on Audit Effectiveness. The panel was appointed by the Public Oversight Board in 1998 in response to a request from the Securities and Exchange Commission (SEC). It was chaired by former Price Waterhouse Chairman Shaun O'Malley and its members included two former SEC Commissioners.
As a basis for its recommendations, the O'Malley panel cited a number of limitations on the effectiveness of the accounting profession's self-regulatory system. These limitations included:
- Differing interests and divergent views of the AICPA's priorities on the part of its diverse membership.
- Lack of unified leadership of the various self-regulatory bodies.
- Constraints on effective communications with the SEC and among the various components of the self-regulatory system.
- Lack of sufficient public representation on the various self-regulatory bodies.
- A disciplinary system that is perceived to be slow and ineffective.
The GAO's 92-page report covers specific actions taken and remaining gaps in the panel's recommendations. The report's main conclusion is that the overarching issues continue to exist. Overall, the GAO characterized the profession's system of self-regulation as "a system that is fragmented, is not well-coordinated, and has a disciplinary function that is widely perceived to be ineffective."
Download the complete report.