Auditing the Auditor

No profession has suffered a more painful drop in public esteem than accounting; in recent years accountants have been regularly criticized for failing to expose corporate shenanigans, and have been sued for allegedly certifying misleading company earnings reports. Four SEC complaints have been filed against Peat, Marwick, Mitchell & Co., onetime auditor of such tarnished firms as Penn Central and National Student Marketing and a giant of the profession (it recorded worldwide billings of $370 million in 1973). Last week Walter E. Hanson, 48, a former railroad accountant and senior partner (chief executive) of Peat, Marwick since 1965, moved to restore confidence by volunteering to have his company's procedures audited by colleagues from competing firms.

Over the next two years a "review team" of some 50 professionals chosen by the American Institute of Certified Public Accountants will visit 20 of Peat, Marwick's 107 U.S. offices and study how well employees do their job. Hanson has committed Peat, Marwick to pay the estimated $350,000 cost of the unprecedented study, and pledges that when the findings are ready they will be made available to the press. "There has been so much criticism about secrecy in the profession," he says, "that it is time we opened up to the people."

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