Mises Wire

Home | Blog | How Much? It's Political, Now.

How Much? It's Political, Now.


It probably began with the 50 or so statewide unions barring anyone who didn’t pass the state exam from pronouncing accounting opinions. It hit high gear when FDR’s Congress (and it WAS FDR’s Congress) established the Securities and Exchange Commission and put crooked Joseph P. Kennedy in charge of it.
Then came Enron and the establishment of the government’s accounting standards board, supplanting that of the American Institute of Certified (by the state) Public Accountants, known as the Financial Accounting Standards Board (FASB).
This Wall Street Journal article explains how, where once accounting standards were set by a board of firms that made their livings producing financial reports that commanded credence among investors and creditors, they are now set by Congressman who wish to be re-elected by the populace at large (of whom only a tiny minority might happen to be investors or creditors).
Accounting standards are now in play. Now, when you read that XYZ Corporation earned $100 million in the last quarter, you may wonder, as never before, whether in any sense it really did.
This happened with the Sarbanes-Oxley Act, and it’s no more likely to be repealed than the Securities Exchange Act of 1934. Productivity moves that much further underground. If you read the published statement of a CPA now, you may be sure that its content was arrived at under duress. It’s been coming a long time, now, and at last, it’s (all) here.

Follow Mises Institute

Add Comment