Accounting Law Commons^™

An Austrian Approach To Accounting Regulation: How Policy Intervention Distorts The Market For Assurance Services, Kyan Howe

Student Scholarship

This thesis applies the causal-realist method of the Austrian School of Economics to the market for assurance services in the United States. The central argument is that post-crisis accounting regulation has systematically distorted the incentive structures of independent public accounting firms in ways regulators do not predict and cannot fully control. Financial crises, properly understood through Austrian Business Cycle Theory, originate in monetary distortions rather than market failure. Post-crisis regulatory responses nonetheless target the profession rather than the underlying distortion, introducing rules that alter the institutional constraints within which auditors exercise professional judgment.

The thesis develops a judgment-based equation of …

Addressing The Auditor Independence Puzzle: Regulatory Models And Proposal For Reform, Martin Gelter, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Auditors play a major role in corporate governance and capital markets. Ex ante, auditors facilitate firms’ access to finance by fostering trust among public investors. Ex post, auditors can prevent misbehavior and financial fraud by corporate insiders. In order to fulfill these goals, however, in addition to having the adequate knowledge and expertise, auditors must perform their functions in an independent manner. Unfortunately, auditors are subject to conflicts of interest by, for example, providing non-audit services or the mere fact of being hired and paid by the audited company. Therefore, even if auditors act independently, investors have reason to think …

4th And 205: How A Rush Of Global Comments Blocked The Sec’S First Attempted Punt Of Attorney-Client Privilege Under Sarbanes-Oxley, John Paul Lucci

Touro Law Review

No abstract provided.

The Sarbanes-Oxley Act Of 2002: Are Stricter Internal Controls Constricting International Companies?, Jennifer K. Coalson

Georgia Journal of International & Comparative Law

No abstract provided.

Japan's Financial Instruments And Exchange Law: Hercules Or Hydra?, Clark T. Wisenbaker

Georgia Journal of International & Comparative Law

No abstract provided.

Placebo Ethics, Usha Rodrigues, Mike Stegemoller

Scholarly Works

While there are innumerable theories on the best remedy for the current financial crisis, there is agreement on one point, at least: increased transparency is good. We look at a provision from the last round of financial regulation, the Sarbanes Oxley Act of 2002 (SOX), which imposed disclosure requirements tailored to prevent some of the kinds of abuses that led to the downfall of Enron. In response to Enron's self-dealing transactions, Section 406 of SOX required a public company to disclose its code of ethics and to disclose immediately any waivers from that code the company grants to its top …

Plea Bargaining's Survival: Financial Crimes Plea Bargaining, A Continued Triumph In A Post-Enron World, Lucian E. Dervan

Oklahoma Law Review

No abstract provided.

Measuring And Representing The Knowledge Economy: Accounting For Economic Reality Under The Intangibles Paradigm, Olufunmilayo B. Arewa

ExpressO

Enron has become a symbol: a symbol of excess, an illustration of how a company can base its business on fraudulent, deceptive or even largely non-existent business transactions. The collapse of Enron had a significant impact on the adoption of legislation such as the Sarbanes-Oxley Act, which was intended to prevent the types of fraudulent behavior that occurred at Enron. However, Sarbanes-Oxley and other responses to the business practices of many companies during the late 1990s do not fully address some of the underlying factors that permitted and in fact encouraged the Enrons of the world to represent their companies …

Global Changes In Regulating Corporate Auditors: A Comparative Assessment, Richard Thompson Ainsworth

Faculty Scholarship

Auditor independence was a global concern of financial regulators in the 1990's. Some observers saw this in a positive light, a natural development. Adjusting auditor independence rules was a manifestation of global convergence in corporate governance structures. New rules, especially rules leaning toward a harmonized system were welcome.

There was a more sobering view. This view held that global regulators were less concerned with convergence than they were with a sense of impending disaster. Things had gone too far. Significant, maybe even radical change was needed. The independence of corporate auditors had eroded; trust had been fundamentally compromised in the …

"Tax Services" As A Trojan Horse In The Auditor Independence Provisions Of Sarbanes-Oxley, Matthew J. Barrett

Journal Articles

This article argues that the failure of the Sarbanes-Oxley Act of 2002 (SOx) to prohibit auditors for public companies from also providing tax services to audit clients or their executives and selling tax shelters to anyone remains a Trojan horse that threatens both the investing public and the auditing profession. Although SOx enacted several reforms designed to enhance auditor independence, the legislation and implementing regulations that the Securities and Exchange Commission (SEC) subsequently promulgated allow an auditor for a publicly traded company to provide tax services to the company as long as the audit committee preapproves the engagement.

As the …

Was Arthur Andersen Different? An Empirical Examination Of Major Accounting Firm Audits Of Large Clients, Theodore Eisenberg, Jonathan R. Macey

Cornell Law Faculty Publications

Enron and other corporate financial scandals focused attention on the accounting industry in general and on Arthur Andersen in particular. Part of the policy response to Enron, the criminal prosecution of Andersen eliminated one of the few major audit firms capable of auditing many large public corporations. This article explores whether Andersen's performance, as measured by frequency of financial restatements, measurably differed from that of other large auditors. Financial restatements trigger significant negative market reactions and their frequency can be viewed as a measure of accounting performance. We analyze the financial restatement activity of approximately 1,000 large public firms from …

Enron, Titanic, And The Perfect Storm, Nancy B. Rapoport

Scholarly Works

This article explores the contention of Jeffrey Skilling, former Enron CEO, that Enron's debacle was due to a perfect storm of events. It rejects his contention, arguing instead that Enron's downfall was more like Titanic's - hubris and an over-reliance on checks and balances led to Enron's downfall. The article then explores how character (especially of those at the top of an organization) can lead to Enron-like disasters, and discusses how cognitive dissonance can lead to very smart people making very stupid decisions. It ends with some musings about how lawyers can learn from Enron.

Enron, Accounting, And Lawyers, Matthew J. Barrett

Journal Articles

Enron's collapse painfully illustrates the importance of financial accounting to all lawyers. Accounting is often referred to as "the language of business." Virtually every lawyer represents businesses, their owners, or clients with adverse legal interests, such as creditors and customers. Especially after Enron, lawyers cannot competently represent clients if they do not grasp certain basic principles about accounting. This article lists the top ten accounting lessons that any lawyer could learn from the scandal. These lessons include the components of a complete set of financial statements, the choices inherent in generally accepted accounting principles, the distortions possible in pro forma …