Following
his recent skirmish with a top AICPA ethics panel,Abe
Briloff is now embroiled in a fresh controversy; this time with the AMERICAN
ACCOUNTING ASSOCIATION (AAA).
Last November, Briloff submitted a paper to the AAA’s ACCOUNTING HORIZON’S
journal entitled, "Garbage in / Garbage Out, a Critique of a Report Commissioned
by the Committee of Sponsoring Organizations of the Treadway Commission".
The commissioned report (called the COSO Report) was a follow-up to the
work of the National Commission on Fraudulent Financial Reporting, which
released its report in 1987. Briloff
shows that, by a sequence of statistical slights-of-hand, the Big 5 "disappear"
from COSO’s"List-of-Most-Wanted". Briloff
also added a subtext: a withering meditation on SEC timidity, and its failure
to pursue a large number of Big 5 transgressions.
In February of this year, the editor of ACCOUNTING HORIZONS, Eugene
Imhoff Jr., wrote to Briloff, rejecting his paper, and enclosing two putatively
blind reviews, one of which identifies Briloff by name (misspelt as "Brilloff!").
The reviews are presented below.
They complain about the potential confusion engendered by Briloff’s dual
theme, of whitewashing Big 5 misconduct, and SEC complicity (apparently
because they thought that HORIZON readers were incapable of holding two
thoughts in their heads at the same time).
They also cite Briloff’s reliance on cases that may have galvanized public
concern, but were ultimately "court-unproven".Finally,
regarding Briloff’s lambasting the SEC, the reviews insist that other (non-SEC)
legal remedies to correct Big 5 infringements should have been considered.
The entire debate ----the original paper, the editor’s letter and
reviews, and Abe Briloff’s response to the reviews --
may now be viewed on this site (links below).The
entire package, together with informed commentaries by anyone wishing to
contribute to the debate, will be eventually published in a special issue
of the CRITICAL PERSPECTIVES ON ACCOUNTING.
If you would like to contribute to this discussion, and have your
contribution considered for publication
Lost on the reviewers is the larger question that Briloff sought
to address (the very question that the COSO Report claims motivated its
own Post-Treadway review): to ‘guide future efforts to combat the problem
of financial statement fraud and to provide a better understanding of financial
statement fraud cases’.This is a
rather surprising oversight on the part of the reviewers as -- in the jargon
of research methodology -- it relates to the "external validity" of the
research.