DISCUSSION OF Whose Power Prevails in Disclosure Practices?

The article focuses on a research which explores the prevalence of power in disclosure practices in auditing. The objective of management letters is stated in the paper in terms of safeguarding assets and establishing and maintaining reliable financial records, i.e., internal accounting controls. The paper identifies the FCPA as the critical event, with 1977 being treated as post-FCPA. The paper acknowledges that other factors, including legal liability concerns, were also at play during 1977. Countervailing pressures would likely cause auditors to err on the side of disclosure, rather than non-disclosure, albeit perhaps wording their comments more carefully and restricting them to weaknesses in internal accounting controls rather than internal controls or operational controls more generally. Most management, being honest and law-abiding, responded more earnestly and quickly to rectify identified control weaknesses as a result of the FCPA requirement to maintain adequate systems.