Charlie Munger: ‘Getting accounting integrity right has huge implications for future of mankind’
December 21st, 2010
In this remarkable interview, Stanford University’s professor Joseph A. Grundfest talks Charlie T. Munger, vice-chairman of Berkshire Hathaway. It might be an old interview (I think it dates from early 2009) but it remains a truly remarkable piece and, in my view, it is a must watch.
Munger puts his finger on the reasons for the recent economic collapse in the developed world, and why we remain in such a mess. The key culprit is the accountancy profession which he accuses of having sold out – he said the “profession” has become a “sewer”, implying that accountants:-
- have totally lost their integrity
- are prepared to do just about anything to earn a fast buck.
- are prepared to conspire with corrupt managements to deceive and shaft investors, regulators, governments, taxpayers etc
- had no qualms about “throwing out the sound accounting and switching to the phoney accounting”
“I would argue that a majority of the horrors we faced would not have happened if the accounting profession were organized properly.
“In other words, [the accountants] have a position from which, if they behaved intelligently and correctly, they could prevent a huge amount of all that’s wrong with the system. And they fail utterly, time after time, after time.
“And they are way too liberal in providing the kind of accounting the financial promoters want. They have sold out and they do not even realise that they’ve sold out … Compared to what could reasonably be with intelligence and honour, the accounting profession is a sewer.”
He also said that the system whereby the brightest graduates are lured to Wall Street was “evil and corrupt”.
This interview really blew me away. I agree with nearly 100% of what Munger, 86, said here. For Munger’s views on investment bankers sector and derivatives traders watch this clip (here’s a clue – he says they’re “out to rook their own customers”).
Short URL: http://www.ianfraser.org/?p=3095