Abstract
Scandalous fraud and improper accounting practices in the private sector forced the collapse of several major corporations, including WorldCom, Enron, and Enron’s accountant, Arthur Andersen. Prosecutors have charged firms, as well as individual officers and executives, with criminal fraud, money laundering, conspiracy, and obstruction of justice in connection with the accounting scandals. Congress responded by adopting the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002, or the Sarbanes-Oxley Act, which created an independent board to oversee the accounting industry, amended securities laws to require greater corporate responsibility, enhanced corporate financial disclosure requirements, and increased penalties for accounting fraud. Yet Congress itself has been guilty of using accounting devices remarkably similar to those used by the corporations to “cook the books” and mislead the public with regard to government finances. Part II of this article explores the extent to which Congress might legitimately apply a double standard, using different accounting rules for itself in connection with the federal budget than those applicable to the private sector in connection with financial accounting. Part III considers differences between financial and budget accounting and provides analysis and comparison of accounting standards applicable to the private sector, government agencies, and to Congress itself. Part IV compares several major congressional accounting gimmicks with those used in private-sector accounting. In addition, it considers congressional accounting gimmicks unavailable to the private sector.
Recommended Citation
Cheryl D. Block,
Congress and Accounting Scandals: Is the Pot Calling the Kettle Black?,
82 Neb. L. Rev.
(2003)
Available at: https://digitalcommons.unl.edu/nlr/vol82/iss2/4