Word: audits
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...Scott Sullivan, recently pleaded guilty to fraud and conspiracy charges, for instance. In other cases, auditors simply lacked spine: again and again, they failed to police the books aggressively for fear of losing the client, along with consulting gigs that brought in higher profits than standard audit work...
...have turned. Strengthened and emboldened by the Sarbanes-Oxley Act, which overhauled accounting responsibilities, the bean counters have taken off their kid gloves and snapped on rubber ones. With their federally issued mandate to look for trouble, accountants no longer have to take a company's word that its audit policies are legit. The accountants have the power to challenge corporate ledgers with impunity--and they're raking in money doing so. "Auditors and audit committees are now in the catbird seat," says Harvard Business School professor Jay Lorsch. Companies no longer feel free to dump their auditors, for fear...
Bottom line: Be nice to your accountants--or else. Outside auditors answer to an audit committee made up of at least two independent board members; previously they might have dealt only with a chief financial officer, and "it would not have been unusual for CFOs ... to try to limit the scope of an audit," says Scott Green, head of compliance for the law firm Weil, Gotshal & Manges. Since the law bars accounting firms from selling certain consulting services to audit clients, including such lucrative ones as information-systems design, auditors face less pressure from their partners to pass cooked books...
...corporate bosses and their employees "to make sure that auditors get accurate information," says Edward Nusbaum, CEO of Grant Thornton, the nation's sixth largest accounting firm. Gary Shamis, a managing partner at SS&G Financial Services in Cleveland, Ohio, says he recently met with the audit committee of a client "for the first time in 20 years." Because auditors are under greater scrutiny and because the law demands it, they must also document the process more meticulously...
...partly out of fear and mostly out of pride, the teachers and students haltingly remodeled their school for the era of testing. Franklin came under a sort of efficiency audit more common to FORTUNE 500 companies. Reading in particular became a science. Teachers read much more nonfiction to kids, since that is a major focus of the test. Students began using computerized reading programs that administered regular quizzes. Just before February testing, kids on the borderline were pulled aside for daily test-taking strategy sessions. All children were assigned adult mentors, drawing on everyone from the principal to a custodian...