THE TRUTH ABOUT CORPORATE ACCOUNTING by Abraham J. Briloff

THE TRUTH ABOUT CORPORATE ACCOUNTING

By
Email this review

KIRKUS REVIEW

If this well-documented arraignment of the accounting establishment gains the currency it deserves, CPA could become synonymous with Certified Public Accomplice. Professor Briloff (Accountancy, Baruch College, CUNY) is an old hand exposing the profession's sins--viz. Unaccountable Accounting (1972) and More Debits Than Credits (1976). His latest critique, however, goes beyond cautionary case studies to address a fundamental issue: who is responsible for the accuracy and fairness of corporate financial reports, management or independent auditors? In a quasi-free enterprise economy where investors, shareholders, lenders, government officials, and other groups base important decisions on audited income statements and balance sheets, the answer is significant. Independent auditors, Briloff concludes, must be ultimately responsible. He warns, though, that even a warrant from one of the Big Eight accounting firms (Arthur Anderson, Ernst & Ernst, et al.) is no guarantee of either correctitude or thoroughness; indeed, Equity Funding, Four Seasons Nursing Homes, Penn Central, and a host of others went bankrupt using ledgers kept according to generally accepted accounting principles (GAAP). A basic problem, Briloff observes, is that there are gaps in GAAP, which, among other things, permit unprincipled executives to manipulate earnings results and squirrel funds for payoffs or other disreputable purposes--undetected as well as unchallenged by their outside auditors, whose see-no-evil bias is reinforced by the permissivenss of industry watchdogs and the courts. Implying that more dirty work goes on than is unearthed, Briloff offers a number of cogent proposals to reinforce the profession's ""commitment to substance over form"" and to restore the public's confidence in the reliability of corporate financial reports. Priority reading for the business community, and sufficiently lucid to intrigue those with only a casual interest in financial affairs.

Pub Date: Dec. 10th, 1980
Publisher: Harper & Row