On May 2, 2002, Baruch College continued its long tradition of accounting reform advocacy by hosting a financial reporting conference that was packed with business executives, as well as students and teachers. The event ended with a standing-room-only question-and-answer session with Paul Volcker, chairman of Andersen's oversight board. Mr. Volcker's presence and remarks underscored the conference theme: "One era has definitely ended and another has tremulously begun. Enron marks the divide." His view is that the issues of accounting reform will continue, regardless of what happens at Andersen's obstruction-of-justice trial.
Mr. Volcker defended the most controversial proposal in his plan to rescue Arthur Andersen and provide a model of best practices for other accounting firms. He emphasized the need for a split between auditing and consulting. "The market is bringing about change," he explained. "The challenge is how to make it permanent."
He also spoke about the growing clamor for principles-based as opposed to rules-based accounting standards. Many reformists have advocated the principles-based approach adopted by the International Accounting Standards Board whose Foundation is chaired by Mr. Volcker. But he fears the U.S. problems are bigger than that. "The American tradition is to have clear and definite rules," he explained, so firms can defend themselves from the "hoards of lawyers" who stand ready to sue auditors for making a bad judgment.
More to Come at Baruch
Norman Strauss, Ernst & Young executive professor in residence, was the conference director. Introductory remarks were made by Baruch College President Ned Regan, a member of the advisory panel to Andersen's oversight board. Featured speakers included Edmund Jenkins, chairman of the Financial Accounting Standards Board, Sir David Tweedie, chairman of the International Accounting Standards Board, and high-ranking officials from the Securities and Exchange Commission.
The conference was held at Baruch's new, state-of-the-art 17-story "vertical campus" in New York City. Baruch is the largest business school in the U.S. Its Stan Ross Department of Accountancy has long been the home of well-known professors who have written and spoken out on issues of ethics and financial reporting. Abraham Brillof, one of the school's most outspoken accounting reform advocates, is often quoted for having said, "Financial statements are like fine perfume: to be sniffed but not swallowed."
Upcoming events at Baruch include an interview with Jack Welch, former chairman and CEO of General Electric on May 15, 2002, a forum to help answer the question of "Where are the owners?" to be moderated by former SEC Chairman Arthur Levitt on May 30, 2002 and a panel discussion of prominent attorneys on the topic of "Class action lawsuits: Do they benefit shareholders?" to be held on June 11, 2002.