A Profession in Trouble

The implication of Arthur Anderson in the Enron scandal sent shockwaves through the auditing world, leading to the highly influential Sarbanes-Oxley act of 2002. Ever since, each of the "big four" firms (KPMG, Deloitte and Touche, Ernst & Young and PricewaterhouseCoopers) have been quick to settle potential fraud cases before they can make their way to court. Listed below are the latest scandals at the major firms, as well as the development of the Sarbanes-Oxley act from Bush to Obama. Recently, the Supreme Court has interjected itself into the debate through its ruling in Skilling v. United States, which has made it  more difficult to prosecute executives for white coll ar fraud.

Though collapse of major financial institutions at the beginning and end of the decade may have arisen from different sources, one factor in the crisis may have remained constant: the inability or disinterest of the world's largest auditing companies in detecting widespread financial negligence amongst major corporations and banks. As the months continue to pass, more evidence is coming to light over the irresponsibility of the big auditing firms in monitoring the fiscal status of the country's major financial institutions.

Regulatory Bodies

The Public Company Accounting Oversight Board is a private sector, nonprofit corporation created by the Sarbanes-Oxley Act of 2002 to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair and independent audit reports. For up-to-date reports on its actions, click here 

For a closer examination at accounting and auditing practices, take a look at the AICPA's Audit and Accounting Guide. AICPA Audit and Accounting Guide

The Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting and reporting. The S.E.C. has statutory authority to establish fianncial accounting and reporting standards (Generally Accepted Accounting Principals, or GAAP) for publicly held companies under the Securities Exchange Act of 194. Throughout its history, however, the Commission's policy has been to rely on the private sector for this function

The International Accounting Standards Board is an independent, not-for profit private sector organization working in the public interest. Members of the board are responsible for the development and publication of International Financial Reporting Standards (IFRs).
Can Ethics Be Taught?

When employees are under constant pressure by the top brass in their respective organizations to cut costs and increase efficiency, they are often presented with a moral quandary in which their jobs depend upon cheating or fudging reports in order to produce the required numbers. While corporate pressure will always exist, America needs now more than ever a new generation of ethically conscious, hard-working individuals. Forging the right values must start at the source of one's auditing and financial career - the classroom. After the second big financial crisis in just one decade, critics are beginning to question what exactly business schools are teaching corporate leaders of America, and many schools are now beginning to listen.
A few years ago, the CPA Journal published a report on how ethics training can be incorporated into what it considers to be an already over-packed curriculum.  
Mary C. Gentile, a writer for Bloomberg Businessweek, offers a detailed analysis of why business schools have failed to stop the new age of widespread cheating.  
Two of the biggest names in the business school world, Harvard and Yale, have been some of the loudest in calling for new ethics training. One of the biggest movements in ethics training has been the MBA Oath, created by a few Harvard MBA grads in 2008 and spoken by the school's graduating class for each of the past two years. Even with 3,400 signatories and support from top business schools such as Yale, Harvard, and Columbia, the influence of the MBA oath looks to grow further - one of its principal advocates, Nitin Nohria, was recently appointed as dean of Harvard's business program. Another prime example is the Giving Voice to Values movement being fostered by the Aspen Institute, which stresses not a focus on ethical analysis, but ethical implementation.
How far can ethics courses in accounting really go? Is bad behavior a sign of a few bad eggs (the normal response from the business school world for years) or is it an outgrowth of the status quo? Click here to read an insightful article that probes these questions more in depth.  
Others' arguments are plain and simple: this new rise in business training ethics is useless.