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Takeaways from the Accounting Scandals

What some of the best managers say about recent accounting scandals.

By now, shareholders have heard from several of the fund industry's best managers--Marty Whitman, Bill Nygren, and Bill Miller, among others--and their take on the current state of corporate accounting. We've also had Warren Buffett's latest Berkshire Hathaway annual report, and we've even had an Op-Ed piece by Buffett's colleague Charlie Munger in the Washington Post. (See "more reading" below.)

These are the folks who know financial statements inside-out. While they disagree on the extent to which the current accounting and auditing system needs changing (Whitman and Nygren say things are fine, while Munger wants big change), most of them seem to agree on the following four points.

1. Accounting disclosure in the U.S. is excellent.
Maybe not an intuitive statement given the scandals, but it's hard to argue with it. "Today, for trained, bottom-up fundamentalists," says Marty Whitman of Third Avenue Value (TAVFX), "GAAP [Generally Accepted Accounting Principles] has never been better, more informative, or more reliable, the Enrons of this world notwithstanding." Bill Nygren of Oakmark made a similar point in his recent Q&A on, saying "I think accounting rules generally work very well and I hope there aren’t big changes."