Perhaps the accounting profession should have welcomed the 1933 Securities Act. By requiring "an independent public or certified accountant" to attest to the accuracy of financial statements, it created a boon for the profession. (McCraw, 191) But accountants were less than enthusiastic, fearing sanctions for misrepresentations of fact and worrying about the extent of government control.
In fact, the extent to which the SEC should regulate the profession was a matter of contention among the Commissioners--Robert Healy, for example, wanted to specify a whole range of accounting principles. Kennedy was less inclined to act as a technician. "I'd hate to go out of here thinking I had just made some changes in accounting practices," he told a reporter. (New York Times Magazine , May 26, 1935) Two factions came into conflict over the Northern States Power Company registration. Healy and Pecora wanted what they believed to be a deceptive statement entirely rewritten. Kennedy, supported by the majority, refused to tell accountants how to do their work--he simply asked that a clarifying footnote be added.
Under Kennedy, the SEC and the accounting profession settled into a cooperative relationship. He and Landis met regularly with members of the profession, and the American Institute of Accountants even formed a Special Committee on Cooperation with the Securities and Exchange Commission. The Commission welcomed the effort, given its inability to handle enforcement all on its own. As Landis told the New York Society of Certified Public Accountants, "We need you as you need us." (McCraw, 189)
The new legislation did make accountants liable for misleading statements or omissions of fact, but with this responsibility came a great deal of freedom--and not just from government meddling. As one accountant wrote, "Instead of being merely a tool of control by business enterprise they become a tool for the control of business enterprise itself." (McCraw, 190)
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