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Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham Sep 2006

Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham

Boston College Law School Faculty Papers

Large audit firms may believe that they are too big to fail. Arthur Andersen’s 2002 criminal indictment reduced their number from five to four, and the government decided in 2005 to avoid indicting KPMG for crimes it admitted committing. If audit firms interpret the government’s reluctance to indict as signaling aversion to tough action against them, moral hazard arises. This offsets auditing improvements mandated by the Sarbanes-Oxley Act of 2002 that are designed to strengthen auditors’ reputations with managers for thoroughness and improve financial statement reliability. Neutralizing this moral hazard requires a credible alternative industry structure so that ...


The Gratuities Debate And Campaign Reform – How Strong Is The Link?, George D. Brown May 2006

The Gratuities Debate And Campaign Reform – How Strong Is The Link?, George D. Brown

Boston College Law School Faculty Papers

The federal gratuities statute, 18 USC § 201(c), continues to be a source of confusion and contention. The confusion stems largely from problems of draftsmanship within the statute, as well as uncertainty concerning the relationship of the gratuities offense to bribery. Both offenses are contained in the same statute; the former is often seen as a lesser-included offense variety of the latter. The controversy stems from broader concerns about whether the receipt of gratuities by public officials, even from those they regulate, should be a crime. The argument that such conduct should not be criminalized can be traced to, and ...