Much to the consternation of my parents, I knew there was a good reason I didn’t attend an Ivy League school — aside from my deplorable grades in high school.
The truth is, I have seldom met an Ivy League graduate with an abundance of common sense. Maybe it’s just the company I keep, but I’ve noticed this disturbing pattern throughout my life. So, please don’t send me angry e-mails threatening to have the Harvard mascot beat me up.
I was once asked by a corporate counsel — a Phi Beta Kappa at Dartmouth and who later, in a moment of inspiration, decided to get her law degree at Cornell — what exactly do pickles look like before they’re picked and put in jar?
Another time, a Yale alumni, awaiting admission to medical school at Johns Hopkins, innocently asked me how do you tell the difference between red and white wine before you open the bottle.
Well, you get the picture.
And so it comes as little surprise to me at least, that a Columbia University-affiliated think tank study on the future of accounting recommended a “supervisory approach to regulation,” as opposed to an enforcement-oriented role.
The 23-page report, which claims that it is a consensus of 57 accounting experts, basically called for less aggressive oversight measures and, in addition, for a cap on the limits on lawsuits filed against auditors.
And in the interest of disclosure, its $300,000 price tag also was subsidized in small part by Big Four firms PricewaterhouseCoopers, Ernst & Young and Deloitte.
The Public Company Accounting Oversight Board, it recommended, should assume responsibility for enforcement cases against accounting firms – thereby reducing the SEC’s role. This way, the paper argued it would prevent firms from “being tried in the court of public opinion,” an allusion to the SEC’s method of filing cases in federal courts which means that any firm finding itself on the business end of an SEC action is in full public view.
The report also claimed to have had involvement from both Securities and Exchange Commission chairman William Donaldson, PCAOB members Charles Niemeier and chairman William McDonough, and Financial Accounting Standards Board members Robert Herz and Katherine Schipper.
Uh, well, not exactly.
Niemeier admitted to being present at some of the discussions, but was not a participant in any decision-making or the final draft of the report. Ditto for most of the others.
The preparers of the report, however, said they were not out to mislead anyone about regulators’ involvement.
First of all, the SEC is not likely now, or in the near future, to cede its responsibilities, nor is capping auditor liability about to become the wave of the future.
Second, the corporate and investor landscape is rife with slow-healing battle scars from “scaled-back” oversight, not to mention the dark comedy that was known as self-regulation.
But then again, you know my experiences with Ivy League common sense.
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