'Stock exchange should pick US company auditors'
Independent bodies such as the New York Stock Exchange and the technology stock market, Nasdaq, should decide which firms audit publicly-listed companies in the US, a leading academic has said.
Link: WorldCom special report
Writing in the Asian edition of the Financial Times, David Skeel, a professor at the University of Pennsylvania Law School, said Sarbanes-Oxley addressed the issue of conflict of interest (in the case of firms providing consulting work to audit clients) but did not address the real problem: ‘the fact that each company picks its own auditor’.
He went on to say: ‘[President] Bush should have proposed that a truly independent body, such as the New York Stock Exchange or Nasdaq, assign the auditors of America’s largest companies.
‘Under such a system – with a stock exchange rather than the company as their client – auditors would now cast a much colder eye on the numbers they pore over each year, and would uncover corporate shenanigans much earlier.’
Skeel is also author of the soon to be published: Icarus in the Boardroom: The Fundamental Flaws in Corporate America and Where They Came From’ .