Saturday, March 29, 2008

Why Good Accountants Do Bad Audits


Corporate-accounting scandals stem less from deliberate corruption than from a deeper, more pernicious problem: unconscious biases built into our auditing system.

What's really behind corporate-accounting scandals? They stem less from deliberate corruption than from a deeper, more pernicious problem: unconscious biases built into our auditing system.

Due to the often subjective nature of accounting and tight relationships between accounting firms and their clients, even honest, meticulous auditors can unintentionally distort the numbers—misleading investors, regulators, and even management.

But new “corporate accountability” laws and threats of jail time won't solve the problem. The situation demands far more aggressive action than the U.S. government has taken.

See full Article.