Unaccountable [electronic resource] : how the accounting profession forfeited a public trust

For thousands of years, those who controlled and monitored society's finances-accountants-were often the most powerful, respected, and influential members of the community. From the collectors at communal granaries in the ancient Middle East to the scribes who monitored Queen Victoria's Exchequer, the accountant's role has been to preserve the integrity of financial systems. In the United States, twentieth-century accountants played a vital role in shaping the transparency of U.S. capital markets, counseling the Allies on financial matters in both world wars, advising Congress on the creation of the federal income tax, and inventing the concept of the gross national product. Yet by 2003, the reputation of the public accountant was in tatters. How did the accounting profession in America squander its legacy of public service? What happened to the accountants that presidents, senators, and captains of industry turned to for advice? Why did auditors stop looking for fraud? How did this once revered profession find itself in this unlikely and humiliating state?

The most recent round of accounting scandals has shaken our economy and tarnished the reputation of a once-respected profession. The inherent conflicts within the flawed U.S. auditing system–where auditors are paid by the companies they audit and financial reports are now viewed as having little more veracity than press releases–have stunned a public that once believed auditors were their eyes and ears inside the country’s biggest corporations. Now, renewed public interest has prompted the government and investors to once again ask: Where were the auditors?

In Unaccountable: How the Accounting Profession Forfeited a Public Trust, former communications director for KPMG and business journalist Mike Brewster explores the fascinating transformation of CPAs from independent voices on behalf of the shareholder to close allies of Corporate America. This vivid snapshot of the twenty-first-century accounting firm clearly examines the implications of this shift for investors, the industry, and the overall economy. Brewster’s exploration of the key issues facing accounting traces the profession from its birth in the Middle East, to its rise as one of the most universally respected in the Western world, to the calamitous scandals of the past two years, to the fall of Andersen and passage of the Sarbanes-Oxley law.

Shaped by the author’s own experiences in the industry, primary research of accounting documents going back hundreds of years, and exclusive interviews with the Big 5’s major players, advocates, and detractors, Unaccountable questions the practices of the nation’s leading accounting firms, including . . .

• Their history of providing consulting services to the same firms they audit
• Their push in the 1990s to open investment banking and law practices
• Their push for double-digit growth with no regard to the ramifications of this growth on their public mandate
• Their resistance to change, even in the face of overwhelming public criticism

. . . and discusses the recent reforms that might lead to better accounting practices and more reliable financial reporting.

From the first accountants to the future of accounting, Unaccountable offers an up-close and personal view of the accounting industry. Unaccountable turns up the heat on an already beleaguered profession, but also shows how the best and brightest within the profession can still save the day by implementing much-needed reforms.

The most recent round of accounting scandals has shaken our economy and tarnished the reputation of a once-respected profession. The inherent conflicts within the flawed U.S. auditing system -- where auditors are paid by the companies they audit and financial reports are now viewed as having little more veracity than press releases -- have stunned a public that once believed auditors were their eyes and ears inside the country's biggest corporations. Now, renewed public interest has prompted the government and investors to once again ask: Where were the auditors? In Unaccountable: How the Accounting Profession Forfeited a Public Trust, former communications director for KPMG and business journalist Mike Brewster explores the fascinating transformation of CPAs from independent voices on behalf of the shareholder to close allies of Corporate America. This vivid snapshot of the twenty-first-century accounting firm clearly examines the implications of this shift for investors, the industry, and the overall economy. Brewster's exploration of the key issues facing accounting traces the profession from its birth in the Middle East, to its rise as one of the most universally respected in the Western world, to the calamitous scandals of the past two years, to the fall of Andersen and passage of the Sarbanes-Oxley law.Shaped by the author's own experiences in the industry, primary research of accounting documents going back hundreds of years, and exclusive interviews with the Big 5's major players, advocates, and detractors, Unaccountable questions the practices of the nation's leading accounting firms and discusses the recent reforms that might lead to better accounting practices and more reliable financial reporting. From the first accountants to the future of accounting, Unaccountable offers an up-close and personal view of the accounting industry. Unaccountable turns up the heat on an already beleaguered profession, but also shows how the best and brightest within the profession can still save the day by implementing much-needed reforms. "In Unaccountable: How the Accounting Profession Forfeited a Public Trust, former communications director for KPMG and business journalist Mike Brewster explores the fascinating transformation of CPAs from independent voices on behalf of the shareholder to close allies of Corporate America. This vivid snapshot of the twenty-first-century accounting firm clearly examines the implications of this shift for investors, the industry, and the overall economy. Brewster's exploration of the key issues facing accounting traces the profession from its birth in the Middle East, to its rise as one of the most universally respected in the Western world, to the calamitous scandals of the past two years, to the fall of Andersen and passage of the Sarbanes-Oxley law." "From the first accountants to the future of accounting, Unaccountable offers an up-close and personal view of the accounting industry. Unaccountable turns up the heat on an already beleaguered profession, but also shows how the best and brightest within the profession can still save the day by implementing much-needed reforms."--Jacket. UNACCOUNTABLE HOW THE ACCOUNTING PROFESSION FORFEITED A PUBLIC TRUST......Page 3 ACKNOWLEDGMENTS......Page 7 CONTENTS......Page 9 My Introduction to Accounting......Page 11 CHAPTER 1 The First Accountants......Page 31 CHAPTER 2 The Birth of an American Profession......Page 51 CHAPTER 3 Accountants Earn a Public Trust......Page 77 CHAPTER 4 The Quest for Growth......Page 109 CHAPTER 5 Cracks in the Facade......Page 133 CHAPTER 6 The End of the Audit......Page 169 CHAPTER 7 The Fight of His Life......Page 197 CHAPTER 8 Enron and the Fall of Andersen......Page 235 CHAPTER 9 Accounting 101......Page 265 CHAPTER 10 The Future of Accounting......Page 291 Notes......Page 309 Bibliography......Page 325 Index......Page 327 A vivid snapshot of the role of accounting firms in the twenty-first century The pitfalls of the flawed U.S. auditing systemcrystallized in the Enron/Andersen debacle and other audit failureshave prompted the nations investors to ask, time and time again: Where were the auditors? In Unaccountable, business journalist Mike Brewster explores the fascinating transformation of CPAs from independent voices on behalf of the shareholder to Corporate Americas best friend. Gives a snapshot of the role of accounting firms in the twenty first century. This work explores the transformation of CPAs from independent voices on behalf of the shareholder to Corporate America's best friend. It also examines the implications of this shift for investors, the industry, and the economy.