Mr. Sommer is chairman of the Public Oversight Board of the SEC Practice Section of the Division for CPA Firms of the AICPA, having been on the Board since 1983. He was a Commissioner of the SEC from 1973- 1976. A Partner in the law firm of Morgan, Lewis & Bockius, Washington DC, Mr. Sommer has a way of seeing the best of what the profession does and continues to be a strong supporter of the profession's self-regulatory efforts.

It is not difficult to prove that accounting and auditing are at the very heart of our system of enterprise. Capitalism is all about numbers, for it is through numbers that the values of assets are expressed, liabilities are denominated, earnings and losses are told. As society and business have become more and more complex, the processes by which those numbers so meaningful to the economy are derived have become, not surprisingly, significantly more complicated and even arcane.

Even if we lived in a world in which we could trust everyone to be candid, honestly representing the numbers portraying their businesses, there would remain the difficulty of determining how the numbers were derived, how they were calculated, what assumptions went into them, what procedures were followed in developing them.

Thus, we have the enormously important job of accounting: developing the numbers according to commonly understood and accepted rules, seeing that the events and circumstances surrounding those numbers are adequately described, and developing those rules and principles of disclosure as well. This leads, of course, to the equally important role of auditing: assuring that the numbers have indeed been calculated using the commonly understood and accepted rules and, to at least some extent, assuring that they are an honest rendition of the underlying reality.

It is impossible to conceive of a functioning capitalistic society without accounting and auditing, healthy and flourishing, pursued by trained, motivated, bright men and women of unimpeachable integrity.

The history of the accounting profession in a capsule is the continuing effort to reach agreement on the rules by which the numbers are to be derived and to assure that they are reviewed in accordance with standards designed to assure their reliability by people free of any bias or impediment to objectivity. It may be truly said that the vast libraries in our accounting firms and elsewhere are all related to these simple propositions.

It is ironic that in this time, when we have come so far in developing accounting principles and auditing standards, there should be concern about the future of the profession. And yet there is.

Recently, the distinguished dean of an outstanding business school narrated with compelling statistics the falloff in the numbers of students in his school and nationwide majoring in accounting both at the undergraduate and graduate school levels. Increasingly they are pursuing courses of study that will take them into investment banking, consulting and other highly publicized paths to uncommon riches.

This tendency on the part of young people to shun a conventional auditing career is undoubtedly influenced by what they hear about the declining profit margins realized on audit work, the long hours demanded of assistants, and the dangers posed by increasing consolidation within the profession.

If these trends continue, the day may not be distant when there will simply not be enough auditors to perform their historically critical function. In the alternative there may be enough people who call themselves "auditors" but whose competence is not equal to their responsibility.

The primary responsibility for avoiding these calamitous consequences is, of course, on the accounting profession, but not there alone. The profession must reexamine the services it can render in this new environment, which has changed the basic techniques of auditing so radically, and must build upon the expertise it has acquired in dealing with computer technology and communication skills. A concept of auditing limited by computer key pushing and pawing over papers will not lure enough of the right people into an accounting career. Only a role that shares the exciting challenges posed to business while at the same time preserving the auditor's historic independence will bring to the profession, and keep in it, the sort of talent that has made American CPAs the respected professionals they are today. This may well enhance the value of the additional services auditors may be able to render.

There is a role for business in this, too. They must eschew the increasing tendency to view auditing services as simply another service like waste disposal, telecommunications, or building maintenance, to be procured at the lowest possible price. The competition among accounting firms for audit retentions is fierce, and business has seen this as an opportunity to pare another cost of doing business.

This may be tragically short-sighted. It may lead to a deterioration in quality, both of services and of the people rendering them, that in the long run will deprive business of one of its most important assets: the credibility of its financial representations. There is a role here for management and directors to assure that auditors are compensated in a manner that will permit them to attract the next generation to the profession and to reward adequately those now rendering this service so indispensable to the free world. The lowest audit fee may not be the best fee to assure the quality of the profession into the next century. 11