U.S. Federal Regulations

Former SEC Chief Accountant: Systemic Problems Need Fixing


Lynn Turner says there's still arrogance in the public business world, more should be spent on enforcement, and higher education accounting should be taught in a framework of making ethical decisions.

Sarbanes-Oxley and SAS 99 may help cleanse some firms and make CFEs' jobs easier but little has changed – unethical, arrogant companies still try to beat the system. So says Lynn Turner, CPA, the former chief accountant for the U.S. Securities and Exchange Commission (SEC) during the height of the major accounting scandals - 1998 to 2001.

Since he left the SEC, Sarbanes Oxley and SAS 99 forced dramatic changes in the way companies and their auditors do business. Some parts of the new rules make the CFE's job much easier. The penalties for document destruction and the more restrictive definition of materiality are two examples. “But fraud professionals work in a shifting tide,” says Turner. “Despite all the changes we still continue to see a record number of restatements. Even with the certification requirement and stiff penalties we still see people lacking the ethical foundation to comply with the rules,” he says.

We caught up with Turner, 50, recently in his Denver office at Glass, Lewis & Co. LLC to get his thoughts about the effects of the sweeping U.S. legal and regulatory changes in the last few years. He is director of research at Glass, Lewis – an independent research firm providing investors proxy, corporate governance, and financial research – and a senior advisor to Kroll Zolfo Cooper in New York City, which specializes in corporate advisory and restructuring and forensic and litigation consulting. Turner is a member of the board of directors of Sun Microsystems and recently was on the faculty of Colorado State University where he had been a professor of accounting in the College of Business , and director of The Center for Corporate Financial Reporting.

For full access to story, members may sign in here.

Not a member? Click here to Join Now and access the full article.