What's really wrong with the accounting profession?;

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What's Really Wrong With The Accounting Profession?
Keynote Speech
A. A. Sommer, Jr.
Chairman, Public Oversight Board
It is a great pleasure and honor for me to be able to speak at this distinguished and respected symposium which has gained such stature within the accounting profession and which, over the years, has provided a means for exploring the important issues confronting the accounting profession. The topics on the program this year evidence the continuing commitment of the sponsors of this program to the discussion of themes which are of tremendous practical, as well as theoretical, importance to the profession.
When I was asked for a title for my remarks, I thought for a few seconds and suggested, "What's Really Wrong with the Accounting Profession?" Only as I reflected on that title later did I fully realize that it might raise expectations different from what I intended to say. It is not my intention to "dump" on the profession or the fine people who practice accounting. What I am really going to talk about is how the financial reporting process may be strengthened and the dangers to professionalism I see in the present climate mitigated. For the most part I won't cover the ground the POB did in its March, 1993 Report.
Strengthening Financial Reporting
I am a fervent believer in disclosure as the foundation of our securities regulatory system in this country. At the core of meaningful disclosure is financial information -reliable, timely, relevant, useful and understandable financial information. That truism, long-accepted, was reiterated in the 1973 Report of the Study Group on the Objectives of Financial Statements prepared under the aegis of Robert M. Trueblood, a distinguished partner of one of the predecessor firms of the co-sponsor of this conference. The importance of communicating that information was underscored by the Long-Range Objectives Committee of the AICPA some years ago:
A satisfactory system for communicating financial and other economic data is an essential condition for the accumulations of capital from widespread sources in single enterprises - i.e. for a successful industrial economy. Persons who have an interest in resources are in varying degrees of remoteness from them and from the factors affecting them. The greater this remoteness, the greater the need for communication of data... In fact, without assurance of reliable economic data, the remote investor or creditor probably would not supply capital to the enterprise... (Emphasis in the original)
The auditor's role in the "reliability, timeliness, relevance, usefulness and under-standability" formula is principally the assurance of reliability and those assurances enhance the usefulness of the information. Along with the information itself, the extent to which the information may be relied upon must be effectively communi­cated.
I would say that while the quantum and quality of information about issuers that is being communicated to shareholders and investors have steadily improved (witness the SEC's recent rule changes concerning disclosure with respect to execu­tive
compensation), there has been scant improvement in communicating the extent to which the information is reliable.
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