The call for reforming the auditing and accounting system keeps getting louder and louder. Now, sophisticated investors such as mutual fund portfolio managers (as well as those from banks and insurance companies) want change as well, at least according to a new survey from Broadgate Consultants.

"There is a great deal of frustration among sophisticated investors in regard to public companies," Chuck Dohrenwend, vice president at the consulting firm, told the MutualFundWire.com. "They feel that the companies are dragging their feet when it comes to change. There is also frustration directed at the SEC for not going after those companies that may be involved in these accounting scandals."

70 percent of the respondents felt that public companies were dragging their feet. 60 percent of respondents said that their investment approach was becoming more conservative because they perceive that those accused of accounting fraud were not being prosecuted vigorously enough.

"Sophisticated investors are looking for greater transparency in financial reporting. And they want more action on the part of regulators so that investor confidence may return," Dohrenwend contended.

There is another issue that concerns this group as well. With the public spotlight now on public companies, approximately 50 percent of respondents feel that qualified individuals will be discouraged from serving on corporate boards. Nearly half also expressed a belief that qualified corporate officers would be discouraged from taking ceo and cfo positions at public companies.

Further, over 80 percent believe that there should be uniform accounting and auditing standards. Nonetheless, well over half feel that recent events will have a positive impact on corporate disclosure. Many believe those practices have already improved since this round of scandals became public.

The survey was conducted over the last ten days, though it was completed before the Merck scandal hit the media and Worldcom executives testified before Congress. 54 portfolio managers responded to the survey. 

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