Speaking at an American Institute of Certified Public Accountants conference in Phoenix Tuesday, former Andersen CEO Joseph Berardino offered his insights as to the crisis troubling both the accounting profession and corporate America and made suggestions as to how such a crisis can be overcome.

Mr. Berardino warned of a dangerous complacency on the part of the leaders of the remaining Big Four accounting firms, saying, "They think (what happened to Andersen) can't happen to them. Talk to me a year ago and I would have said the same thing."

He outlined five recent trends that he feels have helped shape today's business environment and which contributed to the crisis:

1. Stock acquisition isn't just for the well-to-do anymore - more and more Americans are invested in the stock market through stock purchases, mutual fund investments, and 401(k) plan participation.
   
2. Executive pay has become linked to performance and thus the bottom line determines how an executive will be rewarded.
   
3. Media has contributed to an awareness of corporate performance as quarterly earnings reports are touted in the press and CEOs become more visible.
   
4. Hedge funds have provided a new opportunity for companies to take risks.
   
5. Potential conflicts of interest have become more visible.

Mr. Berardino recommends a change in audit opinions from a clean opinion vs. a qualified opinion to opinions issued on a graded scale. He also encourages a change from rules-based accounting to a principles-based model. And he added, "We must increase our ability to detect fraud."

Source: Electronic Accountant