I thought I’d post a relevant snippet from an interview with Charlie Munger of Berkshire Hathaway (WSJ A Fireside Chat With Charlie Munger):
On accounting: tweet
Accounting firms now [in the wake of regulatory requirements under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010] have had to hire so many people that they have had to go way down in the bucket to get all these new employees. The government is asking accountants to be policemen, but the number of people smart enough to be qualified for policing is too low. We shouldn’t be expecting accountants to do the policing. Firms should have the ethical gumption to police themselves: Every company ought to have a long list of things that are beneath it even though they are perfectly legal. Every time you increase the antagonism of the audit by making the auditors the policemen, you increase the tension between the accountants and the clients. More things end up getting hidden, costs go up, everyone ends up worse off. tweet
There are just too few voices of reason in the world today. I’m glad to have had Charlie Munger and Warren Buffett around during my professional career.