What makes accounting exciting?

The collapse of companies like Enron and WorldCom stirred primal fears among investors that the system was rigged. It's one thing to worry about rising oil prices or next month's unemployment report but quite another to question whether several years of corporate income statements or balance sheets were falsified.

More than anything, corporate earnings drive the stock market, and investors rely on the general accuracy of those numbers. The accounting/auditing scandals of 2002 made people rethink all that. Americans took accounting integrity for granted, if they thought about it at all, until the scandals.

What resulted from the accounting scandals was, of course, the Sarbanes-Oxley Act of 2002. This broad package of laws mandated stiffer penalties for fraud, boosted the influence of independent directors on corporate boards, provided more disclosure by companies, forced CEOs to certify the accuracy of financial reports, tightened internal accounting controls and more. Everyone has had to scramble to put appropriate controls, policies and procedures in place.

Corporate directors have been forced to become much more tuned into the issues. CEOs and chief financial officers are more vigilant and conservative. Interest in accounting as a career has risen among undergraduates, including more participation by women.

These are interesting times for accountants and auditors.