Former SEC Chairman Rails Against Accounting Profession
In a recent webcast, former Securities and Exchange Commission (SEC) Chairman Arthur Levitt railed against the accounting profession, said the problems extend well beyond a "few bad apples," and conducted a real-time poll of CFOs and senior financial executives to prove his points.
"In general, accountants are fair, decent, hard working, unappreciated people," said Mr. Levitt, "but the leaders of the Big Five accounting firms and the AICPA were so mindless of a developing crisis in how they were viewed by the public. I began to see more cases of financial fraud, really bad behavior, and situations with the accounting firms that were real conflicts of interest." When asked whether the new financial reporting regulations were necessary, Mr. Levitt said the unethical accounting practices that have received so much media attention were not merely the result of "a few bad apples."
Results of a real-time poll of 450 CFOs and senior financial executives sponsored by Business Finance Magazine and BizNet Software showed:
- 90% believe new regulations designed to make corporations more accountable to shareholders are necessary.
- Nearly two-thirds (62%) of the respondents who claim membership in finance and accounting associations (including the American Institute of Certified Public Accountants, Institute of Management Accountants, Financial Executives International, and Securities Industry Association) stated these associations were not "representing their best interests."
- 36% of the meeting's attendees said they have at one time felt pressure to fudge earnings reports.
Listen to the webcast and download the accompanying slides.