Samuel DiPiazza, chief executive of PricewaterhouseCoopers, the world’s largest accounting firm, has attacked US audit rules, arguing that they are ridden with loopholes and prone to misuse.
Mr DiPiazza also urged US regulators to shift towards a model more akin to those found in the UK and Europe, more based on principles than narrowly interpreted rules. The current US model, he argues is replete with exception upon exception, each of which is designed as a means of appeasing some particular company or industry interest. He pointed out that many US generally accepted accounting principles are six to eight-page rules, with up to 150 pages of exceptions.
He did however comment that US markets remained more transparent than European markets, and cautioned against adopting European-style methods in a wholesale fashion, due to the threat of overweight, EU-style bureaucracy.
Mr DiPiazza also reaffirmed his support for the creation of an independent accounting oversight board, authorized to investigate and discipline auditors caught in violation of accounting regulations.
He did however, stop short of endorsing the legislative bill sponsored by Senator Paul Sarbanes, due for imminent debate by the US Senate banking committee. Sarbanes’s bill would give even more power to the accounting oversight board, including the setting of accounting standards and ethics.
The bill is seen as the last chance to pass Enron-related accounting reform before the elections in November, but it has been stalled in committee by intense lobbying by business interests and through procedural machinations by their Republican counterparts.
Mr DiPiazza also commented on the demise of Andersen after the weekend’s obstruction of justice ruling against them. He made it clear that he did not feel that the company’s collapse would affect the efforts for reform, and that it also served as a model for the remaining big four firms, reminding them of the possible consequences of not pursuing reform.