What responsibility does the government bear for the accounting scandals?
A great deal, especially with respect to accounting principles. Accounting standards in this country are set by the Financial Accounting Standards Board. It is an independent board under the aegis of the Financial Accounting Foundation, which funds the FASB and receives its funds from book sales, publications, and private contributions, mainly from corporations and CPA firms. The SEC has the authority to setaccounting principles, no question about it. But it has delegated that responsibility to this independent board. Over the years, though, Congress has put pressure on the FASB to back away from pronouncements that they’ve issued. As a result, financial accounting standards have not been as rigorous as they should have been. And the congressional pressure, I might add, has been bipartisan. It’s gone from Senator Lieberman through the political spectrum to Senator Gramm. Why has Congress done that? Congress represents the interests of their constituents, especially those constituents t
