Former Andersen executive talks about financial reporting system

By May Wong, The Associated Press
Wednesday June 05, 2002

PALO ALTO – The financial reporting system needs change, and auditors should not bear the entire burden of disasters such as the Enron debacle, according to the former chief executive of the embattled accounting firm Arthur Andersen. 

In his first public appearance since his resignation from the accounting firm in March, Joseph Berardino was scheduled to speak late Tuesday before the Commonwealth Club in Palo Alto on how the Enron scandal forever will change accounting. 

“The process of giving investors financial information to make decisions is broken,” he was expected to say, according to an early copy of the speech provided to The Associated Press.  

“And all the change in the world won’t fix it if we continue to place the entire burden on the accounting profession.” 

Berardino’s speech comes as the trial of Andersen nears an end in Houston. Federal prosecutors indicted the once-venerable accounting giant — whose business crumbled due to fallout from the collapse of former client Enron — on charges of obstructing justice by destroying documents. Andersen has pleaded innocent. 

In his speech, Berardino, 52, does not speak specifically about Andersen, citing pending litigation. 

But Berardino discusses unabashedly what he considers fundamental flaws in financial reporting. Among them: “Like the tax code, we’ve made accounting a game of rules, loopholes and legalisms.”