Accounting and Open Government

As an accounting major, the idea of open government is a fascinating one. In recent years, the U.S. government has passed landmark legislation to ensure the openness and transparency of businesses within the US. However, as USAToday reported earlier this week, the US Government is currently asking to be exempt from new legislation demanding a similar type of transparency in how they (the government) police businesses.

Following the stock market crash in 1929, Congress created the Securities and Exchange Commission (SEC) which was charge with being the "police" of businesses and how businesses interact with the public. In the wake of major accounting scandals such as Enron and Worldcom, landmark leglislation (Sarbanes-Oxley) was passed to help ensure the transparency in the way businesses report their earnings and financial status.

Due to the recent financial crisis, failures of banks, and failures by the SEC to identify ponzi schemes (e.g., Berni Madoff), new legislation has been passed to give the SEC greater power to police businesses. However, the new legislation also requires the government to be more transparent in the way they use those powers.

According to an USAToday article, “the head of the Securities and Exchange Commission said the public shouldn’t be able to see the details of the SEC’s policing of financial firms because it could make the agency’s job more difficult”.

The head of SEC Mary Schapiro told Congress that the SEC should be exempt from public records requirements for some cases because “firms won’t provide information voluntarily if they knew know it could be viewed by anyone, including competitors.”

Essentailly the government (SEC) is saying that being forced to reveal information about their investigations and their investigation techniques could cause serious harm to the companies and firms they are investigating. Open government advocates counter seeing the new transparency requirements as both helpful and necessary.