Accounting: Auditing the Auditors

In the often murky and bewildering world of annual reports, the job of an independent auditor is to shed light. He examines the numbers in company records for accuracy, and describes his findings in a letter that becomes part of the annual report. The Security and Exchange Commission last week accused Price Waterhouse, one of the nation's oldest and most prestigious auditors, of not doing its job. As part of a crackdown on financial fraud, the agency charged that the company had winked at errors in the 1980 financial statements of AM International, a maker of copiers and other graphics equipment....