Accountant's Credibility

A lot of people still suffer from the effects of Global Financial Crisis in 2009. After 3 years on, the effect is still spread through out the world. Accountants are one to be blamed. Falsified financial statement, creative accounting, cooking the book; those are the words describing the accountants at that moment. The implication of misleading financial statements has lead to wrong investment made by the shareholders and the extreme case, the crash of the share market during the crisis. Like what happened with Enron even before the GFC, the company is shut down, investors lost their investment and employees lost their jobs and of course the directors were jailed. This was because of accounting. Arthur and Andersen, as Enron's accountant who agreed to falsified the documents before, destroyed all the evidence they made for Enron and was pleaded guilty at the end, for loosing their independence.

Independence

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It is one of the top as well as the most difficult requirement can be achieved by an accounting firm. Without independence, all the trust will collapse. In theory, independence is needed to limit the accountants, not to follow the client's order but to fairly reviewing and auditing them so that the financial statement is not misleading. In practice, it is kind of the same with say to your boss that he or she is doing something wrong. It is not that easy to do it in practice. When accountants say that the clients have the misleading statement, then there is possibility that the client will leave them and move to another accountant. Of course, it will be less income to the accountant. That is why even after Enron and GFC, there are still so many cases about the credibility that crack the public interest.

The question is, can we trust accountants, more importantly the financial statements that they made? Well, so far, there is no other system of auditing that has been put in place other than the other parties (accountants) will audit the company's statements. However, in China though, this is partly done by the government. But, in the case of the very big power of government in China, actually the government can also manipulate a particular company's statements. It is back to the idea of independence again, where it is broke down in this case.

The automation of accounting system in book keeping and information generation nowadays has made the public asked whether we actually need accountants in the future. Probably the machine is more honest than the human. 

In order to earn the trust back, the current and future accountants have to realise that the business will go to the edge if these issues are not addressed and the integrity is loosen. It really is that this industry still going on because of the regulations created for the company's to be audited. When the trust is gone and the regulations are removed, probably there will be no more accountants as profession.