>>> <DANIEL.DAVIES at flemings.com> 03/10/00 12:46PM >>>
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.
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CB: Oh, thanks for the analysis.
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>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.
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CB: Sorry, I didn't mean that accountants per se are the problem. Seems to me that socialism needs cost accounting and therefore accountants. We always have to count up things.
However, capitalist accountants , like capitalist lawyers, function for the system, as you say. I don't mean that this accounting aspect is the center of the capitalist system. But, the big accounting firm owners have to be pro-capitalism, yet the public image is that these big accounting firms have somekind of independence and objectivity with respect to the system.
As you say, SEC lawyers too are involved in a rather fake task of policing Wall Street.