Home » News » Former Andersen Chief: “Doing Nothing Is Not an Option”

Former Andersen Chief: “Doing Nothing Is Not an Option”

Joseph Berardino, former chief executive of Andersen Worldwide, urged attendees at the Winning is Everything symposium here that the profession must collaborate to restore trust in the profession and outlined a series of strategies to help speed that process.

“I see a public that is angry and fearful and a public that is watching,” said Berardino during a session titled “Crisis & Renewal.” “If we don’t take the lead on this someone else will. Doing nothing is not an option.”

Berardino resigned as Andersen chief executive last March at the height of the Enron audit scandal, ending a 30-year career with the firm. The scandal and subsequent indictment on obstruction charges by the Department of Justice eventually caused the collapse of the 90-year old firm. “If we don’t change the product, the [scandals] trend will continue,” he warned.

Berardino outlined a series of steps he felt should be adopted to improve the auditing process and, in the interim, help restore public confidence, including:

• Examining the present financial disclosure process. “Today we have more complex businesses but we’re still using old financial reporting models.”

• Having audit firms invite outsiders to sit on their boards.

• Grading audit reports in lieu of the current pass-fail system to give a more qualitative opinion. “Under the current system, you don’t know whether the passing grade of the audit was at the high or low end of the scale,” he said.

• Having the audit committee analyze the risks of their clients’ business. “You’ve got to know if there are control systems in place.”

“The one thing all the accounting scandals had in common was that the businesses were in trouble. In a capitalist society you have three constants — businesses are risky, good people make mistakes and there will always be bad people to take advantage,” he said.

Although he declined an interview with Electronic Accountant, Berardino did say that since leaving Andersen, he has been a frequent speaker at CPA firms and colleges.

With regard to Sarbanes-Oxley, Berardino agreed that it was a step in the right direction, but added, “You can’t legislate morality.”

“Yes, you need to win, but you need to win the right way,” he said.

Leave a Reply