TUESDAY, OCTOBER 01, 2002
Accounting tricks around the globe
JOSEPH STIGLITZ
The Arthur Andersen and Enron scandals in America have focused attention on the problems of accounting in private businesses. But the scale of this corruption should not blind us to the problem of public sector accounting, where many deceitful things are also being done.
Accounting rules are designed to provide standardised frameworks within which the financial position of a firm, or government, can be assessed. Bad accounting frameworks always lead to bad information, and bad information leads to bad decisions, with serious long term consequences. This is true in the public as well as the private sector.
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