Dances With Wolves / Artikel, engl.

verfasst von JüKü, 29.05.2002, 19:52

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<font face="Verdana" size="1" color="#002864">http://www.mises.org/fullstory.asp?control=966</font>
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<font face="Arial" size="2"><font face="Verdana" color="#002864" size="5"><strong>Dances With Wolves</strong></font>
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<font size="4">by Karen DeCoster</font>


[Posted May 29, 2002]




[img][/img] Once
again, the nation has been graced with the mothering wing of its congressional
collective. The Corporate and Auditing Accountability, Responsibility, and
Transparency Act (CARTA) passed the House with a whopping 334-90 tally,
opening the doors to unbridled regulatory madness in the wake of Arthur
Andersen’s Enron-related transgressions.&nbsp;




CARTA is presented as an auditor oversight maneuver, one that would
establish a public regulatory organization (PRO) to perform certain review and
disciplinary functions with respect to accountants who certify financial
statements and other documents filed with the U.S. Securities and Exchange
Commission.&nbsp;&nbsp;




However, the greater ambition of the Regulatory Wolves is to unleash the
government’s tentacles onto the private sector and drive out the various
oversight bodies that currently watch over the accounting profession.




Closer review of&nbsp;CARTA&nbsp;reveals it&nbsp;is set in words too broad
to accurately quantify in terms of regulatory specifics. Instead, the bill
ensures that the regulatory doors are wide open for creative interpretations
in regards to"market necessities" and"immediate needs."
As SEC Chairman Harvey Pitt said to the House Committee on Financial Services,
"We support the wisdom of having accounting standards set by the private
sector, but subject to our vigorous oversight."




This&nbsp;vigorous oversight&nbsp;set forth by CARTA focuses on
three main spheres for greater enforcement: financial statement disclosure,
principles-based accounting standards (as vs. technical compliance), and
corporate governance.




The first issue, financial statement disclosure, is in direct contrast to
the goal of having principles supercede compliance standards.&nbsp;Public
company financial statement disclosures are inherently technical in nature,
being that they must meet the terms of GAAP, or Generally Accepted Accounting
Procedures.&nbsp;The disclosure rules encompassed within CARTA, however, are
more centered on trampling the rule of law due to the political expediency of
the day rather than refining the objective of reporting financial information.&nbsp;&nbsp;




In fact, the House bill sets forth notice that the SEC may indeed make
determinations, by rule, for that which is"necessary in the public
interest and for the protection of investors."&nbsp;The bill essentially
provides for the cowboy enforcement of SEC rules by way of civil proceedings.&nbsp;That
is, arbitrary rules that are made up along the way can be imposed and enforced
at will by an obliging, State-supplied judge.&nbsp;Other than this stipulation,
CARTA provides no new technical revelations concerning financial statement
disclosures that aren’t already self-imposed by the accounting profession.




Second, the fact that the SEC--or any government agency--wishes to develop
a moral domain from which to buttress an entire profession is absurd.&nbsp;&nbsp;Pitt
supplies an eye-opener when he maintains that his Commission"seeks to
move toward a principles-based set of accounting standards, where mere
compliance with technical prescriptions is neither sufficient nor the
objective."&nbsp;&nbsp;




This is further defined--in CARTA language--as allowing the SEC more
authority in developing accounting standards, which are currently set by the
industry’s own FASB, or Financial Accounting Standards Board.&nbsp;"The
SEC," says Mr. Pitt,"should exercise its authority to ensure that
FASB’s agenda is responsive to issues facing investors and accountants, and
is completed on a timely basis."




Beware whenever a bureaucrat stresses"timeliness" and harps on
the notion of a private industry body being submissive to the Regulatory
Wolves. The stepping-up of such authority on the behalf of governmental
agencies, more often than not, comes to mean total replacement instead of mere
reinforcement.&nbsp;With such an increasing role for the SEC in the accounting
industry, the rule-setting FASB is likely to become an extraneous body of idle
figureheads.




Finally, there arises the goal of babysitting private entities.&nbsp;So
important is the concept of corporate governance, we find our legislators
already hard at work at devoting an entire bill to its being--the
Shareholder’s Bill of Rights.&nbsp;Cloaked in the usual Orwellian turn of
phrase, this bill that resides within a bill aims to control the conduct and
compensation of corporate board members.&nbsp;




Maybe somebody forgot to tell our elected officials that shareholders in
public companies already have an innate Bill of Rights via the voluntary
nature of buying and selling stock and voting for corporate leadership.&nbsp;However,
the notion that individuals can take care of themselves, make informed
decisions, and voluntarily take risks based on the acquired knowledge at hand
is a foreign concept to the self-nominated elites that ride roughshod over the
real Bill of Rights.&nbsp;&nbsp;




Harvey Pitt, in his testimony before the House, wrapped up things with a
plea to his bosses for additional funding in the budget and a minimum increase
in staffers, consisting of 100 accounts, lawyers, and other watchdogs to help
launch the SEC’s new controlling agenda. Once again, crisis begets the
growth of a bloated Leviathan.




In his January 2002 State of the Union address, President Bush called for
"stricter accounting standards and tougher disclosure requirements."
The message >from Washington, D.C., is that a Merry-Regulation-Go-Round is
always the answer for each and every unfortunate event that transpires in the
corporate world.&nbsp;&nbsp;




We hear that, without ground rules from our assorted government agencies,
there is no"fairness" in the marketplace.&nbsp;We hear that
government, and not the market, is the arbitrator of justice.&nbsp;Yet, Enron
has been done in and Arthur Andersen will go bust, with or without the
government’s tweaking.&nbsp;&nbsp;




It’s unfortunate that investors and innocent employees have to go down
with the Enron-Andersen ship, but capitalism is never a guarantor of success,
only a harbinger of opportunity. With the wolves watching the sheep, chances
are the investor’s market will become more volatile than ever.


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<img alt="Karen DeCoster" src="http://www.mises.org/images/decoster.gif" align="left" border="0" NOSEND="1" width="102" height="131">
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<font size="2">Karen DeCoster, CPA and freelance writer, is a former Big
Nine auditor and a Business Consultant in the Midwest. Send her&nbsp;<font color="#000080">MAIL</font>
and see her Mises.org Article<span class="340184414-29052002">s</span>
Archive.</font>


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• Dances With Wolves / Artikel, engl. - JüKü, 29.05.2002, 19:52