>>>> "Peter K." <peterk at enteract.com> 03/09/00 11:48PM >>>
>Enrique:
>If anyone cares to look it up, there's a lengthy front page New York Times
>story back on January 7th titled "Accounting Firm Is Said to Violate Rules
>Routinely" by Floyd Norris.
>************
>CB: I saw this article. It is just another confirmation that capitalism is
capital crime, theft. The current boom >is, of course, the grandest
larceny ever seen. I don't have the skill or time to prove it. But it would
seem that >left economists and business observers should be exposing and
keeping track systematically of all these facts and >data, empirical
evidence that there is a giant conscious "conspiracy" ( sorry) dimension to
capitalism, even as it >functions as a system ( not conspiracy) at the same
time.
>***************
Actually, what this article confirms is that the SEC is completely up its own arse when it comes to this particular set of rules. What has happened is that some partners owned some stock in some companies, and that Price was auditing those companies. Since PcW is one of only four firms big enough to audit companies quoted on major exchanges, this is hardly surprising.
What the SEC is effectively saying is that they think it's plausible for a partner at an international accounting firm to be so obssessed by the value of his stock portfolio that he fiddles a major audit, manages to cover up the fiddle from the rest of the audit team, and that the effect of earnings numbers on the stock market is in any way predictable. So a top professional accountant is going to jeopardise his career and carry out an entirely unprofessional and dishonest act, in order to shave a few per cent on his stocks. It's ridiculous. A sensible policy against insider dealing is one thing; the idea that this somehow compromises the independence of audit is laughable.
Actually, this regulation has the effect of acting as a protectionist device for the US life assurance and mutual fund industry. There are a fair few firms who would love to compete in the US life market, but can't do so because if they did, then their auditor would have to make sure that no single partner had a life assurance policy written by the company, and as no accounting firm is prepared to take on that task and risk, entry to the US market would mean that they couldn't find an auditor. I've no idea of whether the intent of the regulation is protectionsit, but its effects are.
-clip-
>At the S.E.C.'s request, the Public Oversight Board, an agency created by
>Congress to keep watch on auditors, will review the other major accounting
>firms to see if they have also violated the rules -- the review is a
direct
>result of the PricewaterhouseCooper's report. "This is a very serious
>problem," said Charles A. Bowsher, the chairman of the board and a former
>comptroller general of the United States. "I think everybody in the
>profession will be surprised by the magnitude of this problem."
>---------------------
>CB: This is like the problem of who will police the police, the fox
guarding the chicken coupe
Not fair. In the final analysis, accountants are professionals, not capitalists per se. Their position in the scheme of things is more analagous to teachers, doctors and (particularly) lawyers. They support the system, but it's not their system. The profession of accountancy in various forms has been around for much longer than capitalism, and their function is one which would be needed on any economic model not based on single household production.
d^2 (apologist for accountants)
CB
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