The Enron scandal has been hyped out of proportion, says Ernst & Young CE Philip Hourquebie.
Business failures had been confused with audit failures. “Misguided conclusions have been drawn about the scandal which were not connected to the facts,” he said.
SA Institute of Chartered Accountants executive president Ignatius Sehoole said the institute had been discussing appropriate action for the accounting and auditing profession with Finance Minister Trevor Manuel.
Whether criticism levelled at the profession was factual was arguable. The profession had realised it was consequential. Investor and public confidence had crumbled as a result of corporate scandals, and the institute was attending to that, said Sehoole.
JSE Securities Exchange CEO Russell Loubser said regulators should bear in mind that business was tough enough.
Business should survive and flourish “because of regulators and not in spite of regulators”, and this should be respected by regulators, he said. Overreaction could lead to overregulation, said Loubser.
Sehoole said SA’s accounting practice differed from that of the US in that it was based on principles, while that of the US was based on rules. In the US they looked for “loopholes” the minute rules were passed, he said.
He felt the principle system was the “more reasonable route to go”. SA also supported international accounting standards, which were based on principles.
Hourquebie said Europe and the UK were behind SA in terms of adopting international accounting standards.
The speakers took part in a panel discussion at the Institute of Marketing Management in Sandton last week.
Sanchia Temkin, Business Day (Johannesburg), August 12, 2002