Andersen's Berardino Offers Guidance to Profession

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

You may like these other stories...

Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.