Sun CEO: Accountants Gone 'Wacko', Investors Should 'Go Nuts'
Scott McNealy, the Sun Microsystems CEO who is known in the industry as being rather colorful and blunt, reappeared on the stage of controversy by lamenting about 'wacko' accountants and calling for a return to simplicity in financial reporting.
"The FASB, SEC and accountants have gone absolutely wacko on us. I'm a Stanford MBA, I went to most of my classes. I took accounting. I can't read annual reports, income statements and SEC filings any more. They are absolutely undecipherable," McNealy said on Wednesday in remarks at Toronto's Empire Club.
In an effort to simplify the reporting model, McNealy thinks that a return to cash accounting would be the best move. "If we laid [our accounts] all out with strict cash accounting, and let the analysts do the analyzing and the investors do the guessing, and stop putting the CEOs and the accountants in charge of making judgments, we'd all be a lot better off," he said.
McNealy also had nothing positive to say about the Sarbanes-Oxley Act, the federal effort intended to restore investor confidence in the marketplace. The effects of the Act were like tossing "buckets of sand in the gears of the market economy," he said. "This is an accounting full employment act, backed by the lawyers and supported by the judges," he continued, while expressing surprise that investors haven't "gone nuts" over the increased costs associated with Sarbanes-Oxley compliance.
The outspoken Sun Microsystems CEO worried openly about the effects of the Sarbanes-Oxley Act on good old-fashioned entrepreneurial risk taking, and lamented the inevitable loss of talented people from the ranks of corporate governance because of the increased liability risks.