Today, the structure of our economy is greatly different from what it was when the profession adopted its ethical standards for independence and public disclosure. For one thing, everything is much bigger. CPAs audit companies that are larger and more powerful than many nations. So, it has become extremely difficult, some would say impossible, to maintain our independence in the new economic order. We’ve uncovered plenty of evidence of this problem in recent years, haven’t we?
Some have been calling for expanded public regulation, a distasteful solution to many of us in the accounting profession. However, it is clear incremental change will not fix the problem.
Another possible solution would be expanded public disclosure requirements, which compensate for the structural difficulties of independence.
“ Accountability by Numbers ” ( JofA , Jun.03, page 61), an article about performance measurement, presented an example of the kind of additional information investors and the public might want to see on a more frequent basis. I believe the idea of a balanced scorecard oversight system would be more desirable for the accounting profession than expanded public regulation.
We could get by with incremental changes until the next big scandal, or we could eliminate the risks of scandal by taking bold steps now to align our ethical standards with today’s world. Personally, I would prefer the latter strategy.
Tom Louderback, CPA