Feb 26 2002

ACCOUNTING AND INVESTOR PROTECTION
STATEMENT OF SENATOR RICHARD C. SHELBY (R-ALA.)

WASHINGTON, D. C.--- U. S. Sen. Richard C. Shelby (R-Ala.), member of the Senate Banking Committee, today commented on accounting and investor protection issues:

“Through the course of these hearings the Committee has conducted, we have heard a great deal about the importance of accurate information for properly functioning capital markets. One of the most essential tools for providing such information is the independent financial audit.”

“Certified public accountants are supposed to provide objective analysis to ensure that the investing public is presented with an accurate picture of a company’s financial condition. Unfortunately, recent events provide clear examples of where firms have acted like lapdogs instead of watchdogs. We have seen that too often the ‘public’ responsibilities associated with the title ‘certified public accountant’ have been ignored.

“The Enron case and the many others like it requires that this Committee address a very basic question: can the accounting industry be relied upon to meet its responsibilities to the public? As I have noted in some of my previous remarks, addressing this question is extremely important. Fraud in the capital markets causes damage that goes far beyond the losses of a particular group of investors. Fraud diminishes investor confidence and ultimately stifles economic growth.

“Because of the seriousness of the damage that it causes, I believe we must not only severely punish fraud in our markets, we must also find ways to deter it in the first place.”

“In the end, I do not think that we can legislate honesty or integrity in accounting or any profession. But, I do believe that we must try to establish that those with responsibilities meet them or face consequences for their failure to do so.”



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