Saturday, August 01, 2009

Labor Lawyer: EXPAND Legal Liability of Accountants

A variety of experts on corporate governance testified before the Senate Banking Subcommittee on reasons behind the global recession. Labor pension specialist Richard Ferlauto sent a sizable portion of the blame toward the accounting community and and argued that accountants which knowingly participate in fraudulent acts should be seriously punished. Ferlauto asserted that court cases have effectively shielded accountants from civil liability and watered down the "aiding and abetting" doctrine. Ferlauto also criticized IFRS, claiming that the international standards would decrease disclosure to investors and would effectively "deregulate" corporate financials.

Certainly David Albreghts from "The Summa" could not have asked for better testimony opposing the IFRS. I am of mixed position on Ferlauto's other issue--he absolutely is correct that true misbehavior by accountants should be punished--whether intentional or recklessly sloppy. On the other hand, the legal community absolutely has used lawsuits as a means to browbeat other professionals.


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