If the SEC is so concerned about the conflict of interest between accountants who render opinions and the consulting arms of their firms (see “The Proposed SEC Rule on Auditor Independence and Its Consequences,” JofA , Oct.00, page 26) , then why hasn’t it been concerned about enforcing the Glass-Steagall Act?
When commercial banks overlend to large corporations so their investment banking arms can collect huge fees, there is a tremendous risk to the banking system.
The worst cases of overvaluation in this stock market—the ones that would cause the greatest disaster should the market go down during a recession—are those where the fundamentals (based on an accountant’s audited statements) have no influence on the stock prices. The price of these “story stocks” is influenced instead by momentum trading, investor euphoria and optimistic projections that may never materialize.
Blaming the accountants for trivial differences in the treatment of various items is just an attempt to divert the blame for a possible disaster from Wall Street to the accounting profession.
Robert D. Moore, CPA
Jamestown, New York