SEC Chair Arthur Levitt, in an October 18 address before the Economic Club of New York, continued to push those involved in the securities markets to step forward and be counted in the quest for high quality information and transparency.
"I appeal to every financial analyst, every corporate manager, every board member, and every auditor to renew your covenant with investors and reaffirm your commitment to quality--for the sake of greater public confidence in our markets, for the sake of a better marketplace," Levitt said.
He gave a report card on corporate America's response to his September 28, 1998, speech on the problem of earnings management.
"I thank those in corporate America who took to heart the call for greater integrity and accountability in the financial reporting process," Levitt said. He cautioned, however, that "while we have made strong progress, the gamesmanship, unfortunately, persists." He discussed problems with the relationships between companies and the analysts that follow them and the restrictive access afforded analysts that might issue other than a "buy" recommendation.
Levitt stressed the importance of vigilant oversight of the process by boards of directors and outside auditors. He once again expressed concern about public accounting firms expanding into other areas of professional service.
"If recent industry trends continue, I fear that the audit process, long rooted in independence and professionalism, may be diminished in the name of these increasingly lucrative and commercial opportunities."
Levitt raised the issue of an alternative self-regulatory approach that would replace what he calls the alphabet soup of regulatory bodies--the POB, AICPA PEEC, SECPS, QCIC, ASB, and ISB.
Levitt took the opportunity to reveal the formation of a new group to study the financial reporting model. He framed his announcement by noting the movement from an age of bricks and mortar to an age of technology and knowledge, which may not be recognized in today's financial statements.
"I have asked Professor Jeffrey Garten, dean of Yale's School of Management, to assemble a group of leaders from the business community, academia, the accounting profession, standards-setting bodies, and corporate America to examine expeditiously whether our current business reporting framework can more effectively capture these momentous changes in our economy," he said.
Levitt closed his remarks by discussing the need for high-quality international accounting standards supported by high quality auditing standards and strong international audit firms with effective quality control systems.
The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.
©2009 The New York State Society of CPAs. Legal Notices
Visit the new cpajournal.com.