Options scandal: Where were the auditors?

It's the question that has been lurking in the back of many minds out there: In the ongoing options scandal, where were the auditors? One story making the rounds on the Net holds that Daniel Goelzer of the Public Company Accounting Oversight Board (PCAOB) was asked whether the PCAOB will slap auditors for not catching the abuses. Goelzer reportedly said that accounting rules historically did not count options expenses as compensation, so why would auditors really search for bad practices in this area? This came up at a recent conference, and at least one person was dismayed by the attitude. You have to wonder what SEC enforcement staffers think. If we see a lot of charges come down over backdating, the audit firms may yet be held accountable in some form.

For more on this:
- read this Forbes article

ALSO: This editorial makes the point that options back-dating scandal would not have happened if Sarbox was enacted about 10 years earlier. Editorial

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