New York (March 5, 2002) - From billionaire investor Warren Buffett exhorting shareholders to hold chief executives accountable for proper corporate disclosure, to Deloitte & Touche chief executive James Copeland reiterating his call for the formation of a body resembling the National Transportation Safety Board to investigate audit failures, a consortium of lawyers, money managers and academics voiced their post-Enron opinions on disclosure and auditor oversight at a conference here.

Buffett, chairman and chief executive of Omaha, Neb.-based Berkshire-Hathaway, said "owners are better suited to discipline chief executives than have them disciplined by the courts." He later said the chief executive should be the 'chief disclosure officer' of his or her company, "because he or she determines the qualitative aspect of disclosure." Buffett added the MD&A section in disclosure reports should "read like a chief executive is writing to a partner who's been away for one year." He also said that it's up to the audit committees to be tough on the external auditors and ask hard questions.

But Buffett and the other members of the panel opposed the idea of rotating auditors, as statistics have indicated that the most serious audit failures occur within the first two years of an audit.

Dick Grasso, chairman of the New York Stock Exchange, which lists some 3,000 companies said, "You can't legislate honesty. But investor confidence has been shaken and it has to be restored. There's a marked difference between complex and crooked information."

Buffett and Grasso were panelists in the first of two Securities and Exchange Commission roundtable panels on financial disclosure and audit oversight. The second roundtable is scheduled for Wednesday March 5, in Washington D.C.

Joel Seligman, dean at the Washington University School of Law said the time has come for a systematic review of the disclosure system, both the textual and financials. "You need to determine just what users want to see in financial statements."

In the second roundtable which focused on auditor oversight, D&T's Copeland said the "public must be reassured that we are making progress."

However, he was severely critical of several of the recent proposals offered up by lawmakers such as limiting scope of services, "are too severe and will take us backward. If anyone however, thinks that after all the reforms are completed that there aren't going to be anymore audit failures they're going to be disappointed."

Several members on the audit panel however, pointed to the ineffectiveness of accounting self-governance at the national level.

Bill Allen, of New York University Law School, pointed out that governance at that level (national) is mostly internal in nature and, in a not-so-veiled swipe at the AICPA and the soon-to-be-disbanded Public Oversight Board, he labeled it "not a very well-coordinated effort." But he added that if a company has the right directors, then audit governance is not necessary. But if you have poor directors then all the corporate governance in the world won't help."

In January, SEC chairman Harvey Pitt called for the formation of a Public Accountability Board dominated by public members to monitor accounting oversight.

However, panelist Melvyn Weiss, partner at Milberg Weiss, a firm specializing in shareholder litigation said a PAB was not the way to go.

"The SEC is starved for resources." He suggested an independent government agency led by members who are appointed by the President and subject to Senate confirmations.

-Bill Carlino

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