PALO ALTO, CA: Even as his former firm prepared closing arguments in its trial for criminal obstruction, former Andersen Worldwide CEO Joe Berardino told a Silicon Valley audience that he thinks the financial reporting system needs to change.
Berardino addressed a capacity crowd at an event held by public affairs group The Commonwealth Club. The day before, he appeared as a panelist at Stanford Law School's annual directors' college, a program for directors and executives of publicly traded companies.
"It's difficult for me to understand the celebrity that comes with disaster, Berardino said. "If you had told me 18 months ago that people would recognize me and stop me in the street because I was the CEO of Andersen, I'd have said you were nuts."
George Sard of Citigate Sard Verbinnen has been advising Berardino. There are no firm plans for additional speaking engagements at this time.
Berardino's message was simple: Learn from our mistakes. Financial reporting is "hopelessly inadequate, he said, because there is no "common language for business, companies are not focusing on information investors really need, and accounting has become "a game of rules, loopholes, and legalisms."
Berardino also endorsed a grading system - for use by auditors - to measure the quality and effectiveness of a company's financial statements. Empowering auditors to provide better information would mean giving them an opportunity to deal directly with a company's shareholders, he said.
"In France, for example, auditors may call a special meeting of shareholders, he explained.
"Whether or not this power is used is less important than the leverage it provides auditors to insist on better disclosure and, if necessary, to communicate more directly with shareholders."
While Berardino publicly examined ways for the system to improve, Andersen's PR team was gearing up for the verdict in the federal government's case against the accounting giant for shredding documents related to the collapse of energy trader Enron.
Patrick Dorton, the firm's spokesman, said the evidence has shown that Andersen's intentions were honorable.
"It's painted a picture of Andersen people trying to do the right thing, he said.
David Tabolt, an Andersen partner and spokesman, confirmed that he is no longer with the firm. Charlie Leonard of Chlopak, Leonard, Schechter & Associates has been working with the firm's international issues. Joe Lockhart of the Glover Park Group has also consulted with the firm.