The Current State of Auditing as a Profession: A View from Worker-Owners

Abstract

America’s 15 million union members and their families participate in benefit plans with over $5 trillion in assets. Unions themselves sponsor benefit plans with over $400 billion in assets. These funds are set aside to provide the good things in life to working people— in particular the chance to retire in comfort and dignity. These assets are invested in a wide variety of plans, but most are invested in the debt and equity securities of public companies. While individual workers have diverse goals when investing, most worker money is invested through institutions with very long-term horizons, and at a scale where diversification is crucial. When workers’ benefit funds make investment decisions based on inaccurate financial disclosures, workers are hurt. And workers are not just hurt through the impact on their benefit funds. The employment relationship is a deep and profound mutual investment by the employee and the employer. The employee presumes that the employer is what it seems to be—that promises of wages and benefits, not just in weeks but in years to come, can and will be honored. Financial disclosures create the background circumstances in which employees feel comfortable making that commitment. When those disclosures are false and companies collapse, as happened at Enron, WorldCom, Global Crossing, and dozens of other companies, the employees are usually the most profoundly injured in the form of undiversified losses: lost jobs, health care, and retirement benefits.