According to the Associated Press, SEC Chairman Cox is urging a cooperative effort to make accounting rules simpler for reporting companies.
While that is certainly a noble and worthwhile goal, one has to wonder if the accounting rules are the biggest issue facing public companies these days. The complaint that those of us in the trenches here is not about accounting, but rather Sarbanes-Oxley.
But, a simplification of the accounting rules is still a worthwhile goal, under the theory that half a loaf is better than none.
There were two interesting points in the article. First is that the AP is reporting that Chairman Cox is "blaming the corporate scandals earlier this decade in part on the complexity of the current system." I tried to find the original quotes, but the text of his speech is not on line. I am a bit puzzled by this statement, since much of the "corporate scandals earlier this decade" have resulted in criminal convictions of corporate officers. One does not get convicted of fraud because of complex accounting rules.
The other interesting point came at the end of the piece, where the AP reports that "the Big Four firms audit the books of some 80 percent of the publicly traded companies in the United States."
Four firms do 80% of the work? That is a huge number and one that apparently concerns the Chairman. Quoting from the article:
"Is this intense concentration in the market for large public-company auditing services good for America?," Cox asked in his speech. "If you believe, as I do, that genuine competition is essential to the proper functioning of any market, then the answer is no. ... As regulators, we have a stake in seeing to it that our rules promote, rather than restrict, competition."
Let's simplify those accounting rules, re-think Sarbanes-Oxley and can someone call the IRS and make similar simplification suggestions?
