Begin Process to Restore Public Confidence

BY SAMUEL H. TREGER

As a longtime member of the AICPA, I am appalled at the recent actions and inactions of our fellow CPAs. We are supposed to be the rock-solid figures of integrity and truth—to provide users of financial statements the independent assurances that reported numbers are accurate, fairly presented and in accordance with accepted practices.

I am disappointed in the profession’s inability to police itself. In all the public discussions about tighter controls and monitoring, I have not heard the CPA profession’s programs or comments. Where are we?

We must begin a process to restore government and public confidence in our creed.

Let’s not just use footnotes in an attempt to cover ourselves. Footnotes should be the last resort. The published numbers must be the most accurate and fair as possible. If the footnote must be used and if it is significant, the pro forma results, alternatives and impacts should be shown in easy-to-understand form.

Opinions should declare concerns if audited management disagrees with the auditor’s view, for example, in the accounting for stock options. CPAs need to take the risk that they may get “fired” by the client for taking this principled route.

Prevent firms from conducting both the consulting and auditing functions within the same client—we never should have allowed this to happen in the first place.

Formulate strong ethical guidelines. Teach accounting ethics in college. Require all practicing CPAs to complete continuing education courses on this subject.

Establish an ongoing process of self-regulation with tougher, more thorough peer reviews and periodic audits of the auditor. Call to task and punish those who are significantly out of line.

Work with the SEC and other government agencies to establish effective control and monitoring procedures.

Make public statements regarding the CPA profession’s actions to improve public confidence.

Implement mandatory auditor rotation.

CPAs have a significant public responsibility and a critical role to play in assuring their clients and the public that decisions are based on fact and not fiction. Let’s take this opportunity to straighten ourselves out.

Samuel H. Treger, CPA
Williamsburg, Virginia

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