OLSON: Red ink [Accounting firms cannot be trusted]

Washington Times ^ | Jan. 9, 2009 | Carl Olson Op-Ed

[smokingfrog]

The odds 10,000 to 1 are not good for the public's financial health. Every one of the well-known debacle companies had CPA auditors who said the financial statements were just fine. For AIG it was PricewaterhouseCoopers. Lehman Brothers (the largest bankruptcy in American history) had Ernst & Young.

Fannie Mae's fiascos were OK'd by Deloitte & Touche. KPMG was responsible for Countrywide. The $50 billion Madoff Ponzi scheme somehow could not be detected by numerous CPA auditors for its investors.

Is the loss to the investing public $1 trillion, $2 trillion, or more? How many life savings are destroyed? How many pension funds are imploding, including private and public? With the biggest state population California, has had the most to lose.

We all know that there is no good reason for an individual to believe and act on any financial statement of any company without a positive CPA auditor opinion. We all presume that these opinions are reliable and backed up with not just some ethics code but with some financial guarantee by the CPAs.

But wouldn't it be great if the errors in financial statements were detected by CPA auditors before they are issued and become egregious rip-offs? Lawsuits are after-the-fact remedies, usually taking many years. The public needs immediate and effective discipline and punishment for misbehaving CPA auditors. They need to be stopped before they can strike again.

CPAs and CPA firms are licensed by state government boards of accountancy. Without a license, they cannot conduct any auditing business. In a real sense, boards of accountancy are more important than medical boards. Doctors can injure patients only one at a time. Negligent CPA auditors can wipe out thousands with the stroke of a pen.

California has a typical, ineffective Board of Accountancy

[smokingfrog]

Carl Olson is chairman of the Fund for Stockowners Rights.

[Clintonfatigued]

The public accounting industry has also lost credibility.

[LRoggy]

While we are at it, let’s hang them for insisting on Mark-to-Market for securities and assets that were never going to be publicly traded.

I guess Shakespeare was wrong. First, kill all the auditors . . .

[Clintons Are White Trash]

I’ve been through audits before with Public Accounting Firms and never seen them question the Ethics of much of anything. They will go after detail “stuff” CYA things like making sure your expenses are backed up with accurate invoices, etc.

Basically, in most instances, they are paid by the company they are auditing - you give someone too much crap about their books, you’re going to get fired...where do you draw the line?

[bvw]

JasonC, the rotting is deep. Gangrene in a diabetic’s leg deep. As a nation we will in time grow new legs — but now, for now, for the next few years — an iron sickle is swinging.

[Major Matt Mason]

The public accounting industry has also lost credibility.

It isn't just the accounting industry that lacks credibility. A lack of integrity has seeped into pretty much every facet of our lives. It is difficult to find trustworthy people because it has become OK to lie, cheat and steal. I'm sure this is a gift of the Clinton years, and now we have the Obama/Clinton years to make matters even worse. Until a majority of Americans start displaying and demanding integrity and strong character from leaders of all stripes, we will continue to circle the bowl as a nation.