'Unless we fix the financial incentives to do the wrong thing, people will often do the wrong thing.'

March 2003
Journal of Financial Planning;Mar2003, Vol. 16 Issue 3, p16
Academic Journal
This section presents an interview of Barbara Roper, an officer of the Consumer Federation of America, on the accounting reform efforts of the organization. It became apparent fairly quickly that Enron raised a host of issues we had been working on for years. The U.S. has a sophisticated system of investor protection designed to ensure that we get accurate information about the companies we invest in. It failed, and failed spectacularly, at Enron, but we should not forget that it had failed before--at Waste Management and Rite-Aid, for example. They just did not get that much attention. So there was some evidence that for some time it was not working as intended. But Enron dramatically illustrated the degree to which every safeguard had failed to fulfill its public watchdog function. It seemed inevitable to us that pension reform would be enacted. In January 2002, I would have bet on it. But it did not. We began focusing on the auditor issues, which we also had been involved in during 2000, when the U.S. Securities and Exchange Commission tried, but failed, to strengthen auditor independence. The accounting lobby largely succeeded in scotching that effort. Enron really validated and spotlighted the issues of auditing in which we had previously been involved.


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