The collapse of Arthur Andersen LLP hasn't spurred industry reforms adequate to prevent the collapse of another accounting giant, the Securities and Exchange Commission's former chief accountant said.
Arthur Andersen, which had been one of the five largest US accounting firms, closed Aug. 31 following its obstruction of justice conviction for shredding Enron Corp audit records.
PricewaterhouseCoopers LLP, Deloitte & Touche LLP, KPMG International or Ernst & Young LLP may be the next to collapse, said Lynn Turner, now the director of the Center for Quality Financial Reporting at Colorado State University.
"I don't think the accounting profession has moved forward and is willing to accept change as fast as many of us would like," he said in an interview in Sydney. If the industry doesn't improve its auditing standards, "then undoubtedly one of the four remaining large firms will fail."
The SEC and the US government is trying to restore investor confidence after auditors failed to prevent improper accounting at companies including Enron, WorldCom Inc and Xerox Corp.
Congress passed a law in July creating a new board to supervise the accounting industry. The board will set audit, quality control and ethics standards.
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