Remember Sarbanes Oxley?

[B. John Jones]

It's probably wedged in my head just because of the pride that arises remembering my letter to the editor published in the Journal of Accountancy 2 years after having graduated college. That letter was written regarding the Sarbanes-Oxley reforms then being negotiated following the Enron scandals. At that time I proposed as subtly as I knew how, what I felt was a reasonable solution to financial statement fraud by corporations. It's actually pretty simple. Just have corporations subject their financial statements to dual-audits by competing CPA firms--one firm conducting the primary audit (the brunt of the work); another auditing the primary auditor's working papers and final report. Pretty simple and cost-effective.

 

[waltky]

Granny says, "No...

... who dat?"

 

[B. John Jones]

Granny says, "No...

... who dat?"

Sarbanes-Oxley was a series of accounting reforms taking place as a direct result of the Enron debacle, where executives at huge corporations were gaining huge executive bonuses by inflating certain figures in their financial reports to their stock-holders. One of the "Big-Five" CPA firms, as they were called then, was privy to the lying and stealing. I hate to say it, but in light of the current culture, 15 years later, I doubt that the situation has gotten any better. I wouldn't be in the least surprised to see much more ugly corporate records than were exposed then, being exposed today or tomorrow. I only say this because there needs to be such cost-effective reforms as was mentioned, at least in my view.