Government Accountability Office: Power & Limits

According to the U.S. Government Accountability Office (GAO), major accountability failures over the past several years have been the result of weaknesses in institutional or corporate governance or the lack of individual ethics and integrity. These failures have not only damaged investor confidence they have also resulted in the loss of tens of billions of dollars in investor capital, billions in retirement funds, hundreds of thousands of jobs, general economic well-being, and public trust. High profile accountability failures from around the world, as published by the GAO, include Enron, WorldCom, Tyco, Global Crossing, Quest, Adelphia, CitiGroup, Tenet, Parmalat, National Irish Bank, Delorean, Royal Ahold NV, Lemout and Hauspie, Superior Federal Savings Bank, Micro Strategy, Arthur Andersen LLP, ImClone, Waste Management, Xerox, Health South, CreditSuisse First Boston, Fiat, Yukos, Dexia, Elan, Adecco SA, Seibel Systems, and Lucent Technologies.

To be more specific, the causes of these failures, according to the GAO, are as follows: ineffective governance systems, ineffective regulation and oversight of the accounting profession, inadequate accounting and auditing standards, inadequate attest and assurance procedures, financial managers (along with their legal and financial advisors) working to achieve certain reporting results, inappropriate and unreasonable executive compensation arrangements, confusion over who the auditors work for, auditor’s services to clients that impaired independence, auditors and financial professionals doing what was minimally required and fighting tighter standards, and individual and institutional greed. Not surprisingly, the GAO is currently evaluating the effectiveness of the Sarbanes-Oxley Act and other measures intended to address the above issues.

While we appreciate the GAO’s initiatives for reform and hope our government will work harder to exemplify accountability in all of its activities, no government or rule of law can overcome or correct a society’s lack of accountability. We the people of this nation must resolve our own lack of accountability—as individuals, in our relationships with others, and throughout our institutions. Yes, it starts with me and you and our friends and families. We are the ones who must first purge ourselves of a lack of accountability, owning up to it when we fall below the line that separates the accountable from the unaccountable and actively striving to rise above that line once more. Not even the most effective government in the world can do this for us. We the people, individually and collectively, must act accountably if we expect our communities, corporations, and governments to act accountably.