In the wake of the Enron, Andersen and Global Crossing financial debacles, you rightly argue that investors need “to be told the truth” (Editorial, April 23).
A market system depends on trust as a common asset, a resource on which everyone relies but for which no one is singularly responsible. Unless policymakers find a way to restore accountability and make the audit system self-regulating, financial markets increasingly will appear less trustworthy than a casino.
Creating a business-financed fund to pay all auditors is one simple way to restore trust in financial reporting. It would eliminate the existing conflict of interest by ensuring that examiners receive no compensation from the companies they review. Auditors would then have the incentive to produce the accurate audits average investors need to participate in the financial markets.
