DARIEN, Conn., Dec. 2 /PRNewswire/ -- In a real-time poll of 450 CFOs and
senior finance executives conducted last week, 90 percent responded that they
believe new regulations designed to make corporations more accountable to
shareholders are necessary.
The poll was conducted during a live webcast conference with former
Securities and Exchange Commission Chairman Arthur Levitt, conducted by
Business Finance Magazine.
Moreover, in another poll taken during the conference, nearly two-thirds
(62%) of the respondents who claim membership in finance and accounting trade
associations (including the American Institute of Certified Public Accountants
(AICPA), the Institute of Management Accountants, Finance Executives
International, and the Securities Industry Association) stated these
associations were not "representing their best interests".
Even more revealing is the fact that 36 percent of the meeting's attendees
said they have at one time felt pressure to fudge earnings reports.
On the heels of the publication of his controversial new book, Levitt
joined Business Finance publisher David Blansfield for a live, one-hour
Webcast conference on Tuesday, November 19th, to discuss accounting reform,
financial reporting, and the crisis in corporate governance. The Webcast,
titled "Is It Time for Corporate America To Walk the Walk?" was the first of a
series of "Influencers" webcast conferences from Business Finance -- meetings
with individuals who are influencing the finance profession -- that will
continue in 2003.
Levitt's comments mirrored the tone of his new book, as he railed against
the AICPA and Big Five accounting firms for being misguided in their dealings
with government and their clients.
"In general, accountants are fair, decent, hard working, unappreciated
people, but the leaders of the Big Five accounting firms and the AICPA were so
mindless of a developing crisis in how they were viewed by the public. I began
to see more cases of financial fraud, really bad behavior, and situations with
the accounting firms that were real conflicts of interest," said Levitt.
When asked whether the new financial reporting regulations were necessary,
Levitt confirmed that the unethical accounting practices that have received so
much media attention were not merely the result of "a few bad apples."
"I think we've experienced a two-decade long erosion of ethical values on
the part of corporate America as the function of a runaway bull market," said
Levitt, "and this represents in my judgment a systemic flaw that needs to be
addressed, because the problem is pervasive. If companies A and B are engaging
in questionable behavior, companies C and D can't be far behind. What was bad
practice soon becomes unethical, and what was unethical soon becomes
Levitt reflected on his tenure with the SEC, and what prompted him to
become a champion of the individual investor.
"When I came to the SEC, I had an agenda. I had enough respect for our
country's capital markets, which had given me virtually everything I'd ever
owned, to believe that public confidence is at the core of those markets,"
said Levitt. "I think that American investors are the best protected of any
in the world. They are protected essentially by a trilogy: the enforcement
efforts of the SEC against fraud, the enforcement efforts of the self-
regulating organizations -- the major stock exchanges and the NASD -- and
finally, private rights of action. I absolutely believe that every element of
this trilogy is essential for protecting American investors."
Levitt revealed that backing down from the stock option expensing issue
was his biggest regret of his career. "A lot of the excesses that occurred in
the 90s were the result of stock options improperly accounted for and
improperly awarded -- that's a joint responsibility of boards of directors and
compensation committees. Expensing stock options is a litmus test for those
companies that stand with investors and companies that don't," he said.
"Silicon Valley companies may be the last to come to the table, but they will
The Webcast was sponsored by BizNet Software, a service provider that
specializes in helping companies optimize their systems to improve the quality
of their financial reports.
To replay this webcast, visit http://www.bfmag.com/index.html?86
Levitt will continue to discuss corporate governance and accounting reform
when he joins Business Finance for a second live, one-hour Webcast conference
on Thursday, December 19 at 12:00 pm ET. To register to attend visit
Business Finance Magazine
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SOURCE Business Finance Magazine