I recently finished reading Harvey Silverglate’s Three Felonies a Day: How the Feds Target the Innocent.
Here’s another example of what he was writing about. Read the whole thing, but here’s an excerpt:
…every incentive that we put in place as a company was designed to encourage people to achieve their goals. All these incentives had the caveat that the goals must be achieved while obeying the law. Now that may sound simple, but in virtually every meeting every day people discuss their goals and how they will achieve them. They almost never discuss accounting law. In a sales forecast meeting, you will often hear, “What can we do to get this closed by the end of the quarter?” You never hear, “Will the way we made the commitment comply with Statement of Position-97-2 (the critical software accounting rule)?”
Beyond that, U.S. accounting law is extremely difficult to understand and often seems illogical and random. For example, the law in question with respect to stock options, FAS 123, is filled with paragraphs such as this:
“This Statement does not specify the measurement date for share-based payment transactions with nonemployees for which the measure of the cost of goods acquired or services received is based on the fair value of the equity instruments issued. EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, establishes criteria for determining the measurement date for equity instruments issued in share-based payment transactions with nonemployees.”
And that is the clear part.
Here’s Ayn Rand once again on the topic:
There is no way to rule innocent men. The only power any government has is to crack down on criminals. When there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking the law. Create a nation of lawbreakers and then you can cash in on the guilt. Now that’s the system! – Atlas Shrugged, 1957
As others have observed, Rand wrote a cautionary tale. It seems more every day that it’s being used instead as an instruction manual.