Accounting failures enter the subprime equation

As homeowners, shareholders and federal investigators pick through the subprime wreckage, many have asked how effectively front-line financial monitors carried out their duties. Ratings agencies responsible for signing off on the creditworthiness of securities, and regulators responsible for overseeing banking practices and safeguarding the entire financial system, have already been roundly criticized for not sounding alarms earlier.

Now, attention is turning toward yet another steward of financial reporting ensnared in the subprime debacle: accounting firms.