Not Naming Names

Image via WikipediaHave you heard of the Public Company Accounting Oversight Board? The board is the result of Sarbanes-Oxley. It "is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports".

The board has found a number of adult failures since it began. However, it has not identified any of the companies involved in these failures. One might ask whether failure to name names "protect(s) the interests of investors". For example, KPMG allowed Motorola to book a sale in a quarter earlier than the sale had actually closed. Yes, a sale that closed on the first day of the fourth quarter appeared as a third quarter sale on Motorola's books with the approval of KPMG. This sale was not a trivial one; it accounted for 28% of Motorola's 3rd quarter. Counting it as a Q4 sale would have meant that Motorola missed its 3rd quarter numbers and, in this day of quarterly judgments, that would have been bad for Motorola.