Essay - Regulating the Accounting Industry Introduction the Purpose of This Paper...

REGULATING THE ACCOUNTING INDUSTRY

INTRODUCTION

The purpose of this paper is to introduce and discuss regulation of the accounting industry, which is currently self-regulated. Is ***** necessary, and if so, why?

THE ACCOUNTING *****

Currently, ***** accounting industry ***** a "self-regul*****ting" *****, which means they set their own rules, ***** abide by them within the industry, with a minimum of outside intervention. The Fin*****ncial Accounting Standards Board governs companies. The board ********** the rules and applications accounting firms must follow.

Many experts feel that self-regulation is no longer working, and the Federal Government needs to place more constraints on accounting *****. "...***** and deregulation ***** the financial industries has gotten us into this mess. Auditors are allowed to receive income both from auditing and ***** consulting or 'management advisory services' ***** ***** same client, the latter usually being the more lucrative relationship with more potential for growth" (Amato).

She goes on to say, "The ***** profession does not have any meaningful system of internal discipline ***** the private bar has been constrained by the 1995 Private Securities Litigation 'Reform' Act. The Securities and Exchange Commission ***** largely ceded its regulatory power over accounting standards to the private sector" (*****). In o*****r words, no one has been watching accounting firms very closely.

Accounting firms do monitor themselves, there is even a web site for firms who are concerned about malpractice: AccountingMalpractice.com, which includes information on risk management and "firewall protection." Most industry analysts feel however, ***** the industry ***** more controls, and the current regulations proposed by the Securities and ***** Commission (SEC) ***** still not enough to ensure another "Enron Scandal" will not occur. "Even if Pitt produces a strong *****-reform plan, an SEC heavily stacked ***** the accounting ***** ***** *****see the new watch*****gs. Such industry influence paved the way for *****'s demise and provides little reassurance that this fiasco is ***** last" (USA Today).

Even the SEC has admitted that ***** industry needs re*****m. Chairman Pitt said in a speech in January, "Our disclosure and financial reporting system is still the best in the world, but it ***** long needed improvement. Its inadequacies are more visible after Enron's failure, and the need for change cannot be ignored any longer" (*****).

Clearly, the current system is flawed, if a multi-million doll*****r comp***** such as Enron can fool the public, the SEC, ***** its accountants, and go broke in a matter of weeks. Arthur Anderson, for whatever reasons, did not detect the problem, or chose to ignore it. Either way, the situation has ruined thous*****s of lives, and *****d the ***** America (***** ***** world) views accounting firms. I ********** in order to gain the public trust once more, there needs to be a m*****jor overhaul of accounting regula*****ry practices. Even if the ********** findings and proposals are ***** enough, as many people now believe, something must be done to ***** ***** this sc*****al cannot happen a*****.

The SEC says, "A strong ***** profession is key ***** our capital *****,