OT: DD - regarding CPA's and audits
I used to be proud of the fact that I am a CPA. CPA's in society used to be highly regarded and thought of as ethical. Due to the greed exhibited by my colleagues that allowed the Enron and WorldCom problems (to name just 2) the profession has suffered immensely. My profession needs to go back to being the watchdogs for the integrity of the nations financial system. We need to recognize that the system is broken and stop not only allowing companies but also stop assisting companies in creating false financial statements. Let the chips fall where they may but let's get back to real accounting. There will be fallout but the nation's financial system will be stronger for it. We need to get back to reasonable expectations from investors, company management and the public alike.
Don't despair. As a fellow CPA, I understand how these scandals have tarnished the reputation of the profession. Be assured that things are changing. While I don't conduct audits any more, I am involved with a VC firm that has an annual audit. The auditors have gotten much tougher, demanding more support and evidence than ever before, including full FS from all the privately held investments, whether equity or loans. One of our holdings is a start up that in 2002 doubled it's cash position to over $1.00 per share, has no debt, increased income from $.30 to $1.00 per share and has no dilution. I had to spend a long time to convince the auditor that our investment in this company should not be written DOWN. In 2000, the same auditor basically used our cost as basis without FS and little investigation into the underlying company. They are now inquiring about transactions involving hundreds of dollars for a fund that is in 8 figures. It's gotten frustrating harping on materiality, but that is the new paradigm I've experienced. And we have nothing shady or that even appears shady going on.
The CPA's that helped Enron and WCOM achieve their goals have been rightfully held up to ridicule and a large national firm received the death penalty. The profession has become pointedly aware of it's responsibilities to the public and knows there are serious consequences for failure. CPA's reputation have taken a hit, but by the profession acknowledging and condemning the actions of those members that failed to protect the public interest combined with a renewed vigor for meeting our responsibilities to our clients, the public, the government and all affected parties, CPA's will regain the respect we lost. Contrast the reaction of a CPA that helps someone get away with something at the expense of others with a lawyer who does the same thing. The CPA is criticized and loses clients. A lawyer that can get a guilty client off or can win a frivolous lawsuit is a brilliant hero to his clients and to other attorneys. They have no duty to the public at large, only their client. As long as CPA's continue to strive to perform our duties ethically and truthfully, we will earn public respect.
