Until 1977, accountants' ethics rules banned them from advertising. Since then, spending by the biggest CPA firms for ads to lure clients has risen from $4 million in the early 1980's to more than $100 million.

The firms claim that advertising brings in added revenue so they can improve services, and give their auditors a sense of independence that allows them to be tougher with clients while remaining competitive with other consultants.

But critics say advertising is damaging rather than shoring up ethics. The proof, they contend, is the rising tide of audit failures in which auditors wear blinders to fraud, the hiding of debt and the creation of fake profits. Clients, they say, are willing to pay huge fees for consulting to keep auditors from looking too scrupulously at the company books.

Arthur Bowman, editor of Bowman's Accounting Report in Atlanta, maintains that the permission given almost 30 years ago to advertise "has flipped" the ethical outlook of accounting firms into a conspiracy to fool investors.

"Accounting-firm advertising seems to stress that it's more important for accountants to make money than to serve the public ethically through effective auditing," he says.

Douglas Carmichael, director of the recently created Center for Financial Integrity at Baruch College in New York, asserts that increased advertising by major accounting firms has permitted the business side of accounting "to take over the professional side."

He noted that a panel on audit effectiveness set up by the Securities and Exchange Commission in 2000 concluded that the practice of auditing wasn't being regarded highly enough by the big accounting firms. And the SEC itself said auditors of public firms weren't working hard enough to prevent fraud at their client companies.

The trend of spending more for advertising than for ethical training and audit effectiveness is continuing, says Carmichael, who was the former vice president for auditing at the American Institute of CPAs and is the Wollman Distinguished Professor Accounting at City University of Baruch College.

Jay Nisberg, a Ridgefield, Conn., consultant to more than 100 accounting firms, says that blaming advertising alone for the current problems of accounting firms may be "Monday-morning quarterbacking." Still, he concedes that the increase in advertising to attract business "has likely detracted from the focus of quality client service."

Prior to the more recent and flagrant accounting scandals, accounting firms began trying to "be all things to all people" and "to offer services that made them more consultants and business advisers than auditors," says Bowman. Also, accounting firms began hiring marketing specialists from consumer product companies who knew little about auditing's strict rules, which protect investors in public companies, he says.

"So it's no wonder that since then the major CPA firms have been forced to sell or spin off their consulting practices," Bowman says. "They just began to wear too many hats."

Advertising costs for consulting firms have risen sharply, says Bowman.

Note the recent eight-page ad in the New York Times and the Wall Street Journal for IBM Business Consulting Services, which acquired PricewaterhouseCoopers LLP's business-consulting unit for $3.5 billion in cash and stock in October. Based on those newspapers' ad rates and depending whether PWC received a frequency break based on IBM's ad schedules, that spread could have cost IBM as much as $1.5 million for only a one-time insertion.

The ad maintains that the former PwC consultants dig "deeper" beyond the clients' current layoffs and search for advice from traditional sources. It notes that IBM now has 600,000 consultants in 160 countries offering business strategy. "Everything it takes, no matter what it takes. All around the world. All under one roof."

"Everything it takes" -- except auditing. Because if an accountant audits a company's books, he can't always be the client's best friend. His first allegiance is to the users of financial statements -- that's the law.

LEE BERTON is a journalist and a consultant to the accounting department of the City University of New York's Baruch College.