Audit Business Nearing Crisis of Faith

The growing number of earnings restatements over the past few years might suggest auditing firms have lost their way, although they're not about to admit it. Instead, they shift blame to the reporting system itself, calling it antiquated and "unresponsive."

That might be true, but it doesn't excuse the major offenders. After all, if the accountants are not accountable, what's to stop another disaster like Enron (ENE Quote) from happening again?

The deterioration in accounting standards has become increasingly pronounced in recent years, as evidenced by a study conducted earlier this year by Financial Executives International Research Foundation. The survey found that 464 companies had restated their earnings in the last three years, more than in the prior 10 years combined.

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