Create an organization like the National Transportation Safety Board to investigate the causes of business failures.
Create a new self-regulatory body for the auditors of public companies that would oversee the profession, perform quality reviews of auditors' practices and discipline auditors and their firms when appropriate. Disciplinary actions would be reported to the public.
Rotate individual audit team members.
All firms auditing public companies should embrace most, if not all, of the recommendations of the Panel on Audit Effectiveness, created by the Public Oversight Board at the request of the SEC.
The issue of "revolving door" situations in which an auditor goes to work for an audit client should be addressed by
audit committees rather than remedied through legislation or regulation.
Restore public confidence through a study of compensation practices by the new Public Accountability Board.
Reduce the frequency of restatements through the profession and the SEC working together to develop a user-friendly system to review and pre-clear accounting for complex and unusual transactions before they've been reported in financial statements.
Auditors and the SEC should focus their attention on companies with the largest market capitalization, particularly when combined with a high price-to-earnings ratio, to eliminate much of the market volatility arising from restatements.
Pursue creative new forms of financial reporting, such as "condensed" annual reports or web-based financial information written in plain English. Users can drill down to the level of detail they seek.
