Thoughts on the Profession

Thoughts on the Profession

By Don A. Kiamie, Westchester Chapter President

Steroids, baseball, consistency, comparability and change.

What do these words have in common? Can we apply the steroid issue and the solution by the baseball league’s management to the recent scandals affecting Arthur Andersen, Enron, and WorldCom? Did baseball go far enough in solving its steroid problem, or are they continuing to look the other way?

On one of my first audit assignments (yes, I did audits at one time and even some tax returns, and I wasn’t always in industry), I was asked to do an unrecorded liability review and discovered that an electric bill received in January for the month of December was not accrued at year-end (this was a December 31 company). When I asked the senior if we should make an adjusting entry, he stated that they already had recorded 12 electric bills for the year. If we made an adjusting entry, he said, there would be 13 bills for the year, and that couldn’t happen with only 12 months in a year. Of course, in the accounting world, we all know how to count. Basically, since the same procedure had been going on for all the years of the audit, we couldn’t change now because of consistency and comparability issues.

In the past and present, is the profession still turning a blind eye because of consistency and comparability issues? Many times, we don’t like to face the facts and/or change because it makes us feel uncomfortable. Is Sarbanes-Oxley (aka “SOX”) the answer?

Briefly, the major provisions of SOX are: criminal and civil penalties for securities violations, auditor independence/certification of internal audit work by external auditors, and increased disclosure in the areas of executive compensation, insider trading, and financial statements. SOX, in my opinion, is the most significant change to federal securities laws in the United States since the New Deal (1933 and 1934 Securities Acts). But it is only a beginning. Our profession needed and still needs change. It’s too bad that the changes must come in the wake of the aforementioned scandals. We don’t have all the answers, but we have to keep looking deep into our profession before the next major scandal hits the news.

What are your thoughts? Remember, it is our profession that is being attacked. We need to be proactive rather than taking the defense position.

Wow: this is my last or next-to-last message, depending on whether we have a May newsletter. Serving as your chapter president has been a valuable and great educational experience for me.

The comedian Bob Hope always signed off his performances with a song called “Thanks for the Memories.” On that note, I am so ever grateful for the support of my officers, board, committee chairs and, of course, you, the members of the Westchester Chapter.