Larry has so many interesting posts up that I can't deal with each separately, so I thought I would try a list:
- Inspired by GE social responsibility report, Larry discusses SRI. Among other tidbits: "as the GE example indicates, a firm can promote social responsibility as a way of gaining competitive advantage if its business includes selling products that appeal to the social responsibility crowd. GE notes that it sells efficient energy products that appeal to the global warming zealots."
- He comments on the SEC's press release on internal controls, which blames accountants for being "overly cautious" and admonishes them to "bring reasoned judgment and a top-down, risk-based approach to the 404 compliance process." Larry observes, "the accountants will ignore the SEC’s admonition, particularly since they get paid for being strict, and nailed if they’re not." I would add that they get paid more and more as their insistence on strictness increases. What is the constraint on accountants? Sincere question: is there real competition in the accounting industry? If not, SOX looks like a license to print money and Larry is right that no amount of cajoling by the SEC is going to change that.
- Finally, Larry is wondering about blogging as scholarship again, this time as a result of Paul Caron's scholarship award.
Good stuff at Ideoblog. Check it out.
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1. Posted by jult52 on May 19, 2005 @ 7:44 | Permalink
As you know, corporate clients can in fact change accounting firms. Now this involves a fair amount of trouble and can damage a company's stock price and reputation, but the threat is nevertheless a real one and serves to hold down audit fees.
Another thing to consider is that it isn't just an accounting firm that has a relationship with the corporate client, it's an individual partner. That partner's career can be significantly damaged when he/she loses the client. So the client definitely has power in the relationship.
My prediction is that SarbOx 404 will be successfully altered by corporate lobbying in coming years and compliance costs will be reduced dramatically.
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