When Berardino spoke at a recent Stanford University seminar for board members, he was greeted with a mixture of cynicism and curiosity. "There was a very skeptical group who thought everyone associated with Andersen is tarred in perpetuity," says Joseph A. Grundfest, a Stanford professor. "They can't tell how much of Joe's message is sincere and how much of it is post-crisis positioning."
Still, Berardino had a unique view of the accounting crisis that afflicts Corporate America. The irony is that some of his ideas may be worth considering even if his credibility is nil. Among them:
-- Rather than a pass-fail system of approving financials, auditors should hand out report-card grades that reflect the quality of a client's accounting. That would give auditors more leverage over clients in accounting disagreements and also enable the market to give a premium to companies that get the highest marks and discount those that get the lowest grades.
-- Change the focus of directors so that they're involved in risk management, not the verification of financials. The most important questions that a director can ask: "What are the most significant risks to this company, how likely are they to occur, and what is management doing about them?"
-- Change the financial-reporting system so it is based less on "a game of rules, loopholes, and legalisms" and more on principle-driven accounting--the approach of the International Accounting Standards Board.
-- Require each accounting firm to put three or four outsiders on its board of directors to make these private partnerships less insular and inbred.
Berardino is gloomy about the prospect for change. "My fear is that we'll go through another year of looking for scapegoats." The question is, will anyone heed the warning?