Accountability Environment

Accountability Environment

• The credibility of auditing and financial reporting has suffered in the last several years as a result of the accountability failures in the provide sector.

• Forces that lead to the corporate scandals and audit failures includes:

  • Individual and corporate greed
  • Inadequate corporate governance systems
  • Ineffective regulation and oversight of the accounting and auditing profession
  • Inadequate accounting/reporting standards
  • Audit-related expectation gaps
  • Financial managers and advisors working to achieve certain reporting results and focusing on the legal form versus the economic substance of the transactions
  • Unreasonable and inappropriate executive compensation arrangements
  • Auditors and financial professionals doing what was minimally required and actively fighting tighter standards
  • Confusion over whom the auditors work for
  • Auditors delivering services to clients that impaired their independence

• While the recent failures have been concentrated in the private sector, the entire profession has been affected and steps need to be taken to modernize the profession and related standards and practices for the 21st Century.