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With regards to Enron
accounting scandal, blame can be placed both on Arthur Anderson and the entire accounting
community that should be doing a far better job of regulating their own approved
policies and procedures. CPA regulatory bodies should be "burning the midnight
oil " and clean up their GAP rules before the government steps in and does it
for them.
Bob Foersterling,
BNí68
Senior vice president, Morgan Stanley
Arthur Andersen has a fiduciary responsibility to its client Enron, however, it also
has the responsibility to advise management of illegal or improper accounting activities;
and if not corrected to report them to the USG.
Cary Viktor, BNí68,
GRí72
Director of industrial participation, Lockheed Martin Missiles and Fire Control
The Enron/ Andersen fraud threatens to undermine the credibility of our capitalist
system. The self-correcting mechanism of capitalism worked as capital markets punished
Enron's shares effectively taking corrupt and inept managers out of the game. Capital
markets have put future would-be fraudsters on alert by punishing the share prices
of other companies employing aggressive accounting tactics. The proper role of an
accountant and his/her client is the same as it was before the Enron debacle, which
is to present a true and faithful picture of the company's income, assets, liabilities
and cash flow to investors. When all the facts of this case are available it is likely
that the evidence will show that the auditor and the management conspired to misrepresent
the income, assets, liabilities and cash flow to investors. This will boil down to
a simple case of fraud where the board was caught napping. There is no need to change
the role of the accountant because changing the role will not protect investors against
individuals who lack integrity.
Chris Faber
Hedge Fund Manager
The accounting profession has sold out. So much for it's vaunted ability to quantify
business results! It's time for independence in auditing. The profession has got
to put itself in the position of being willing to lose clients. If accounting results
are too complex to be understood and audited, they should be discarded as worthless!
Chuck McDonald,
BNí60
Retired vice president, Allied Group
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The accounting profession
has sold out. So much for it's vaunted ability to quantify business results! It's
time for independence in auditing. The profession has got to put itself in the position
of being willing to lose clients. If accounting results are too complex to be understood
and audited, they should be discarded as worthless!
Chuck McDonald,
BNí60
Retired vice president, Allied Group
The auditor should not be allowed to do consulting for the same company. Another
change would be to limit the number of consecutive years that an accounting firm
can audit a given company. Another problem is that frequently the client will hire
an employee of the auditing firm. These situations allow too many opportunities for
conflict of interest and not allow the auditing firm to be objective.
Don Bardonner,
BNí57
Retired
I think the "public" in CPA needs to be reasserted in a way that makes
the profession avoid even the appearance of impropriety. Unfortunately, when management
intends to perpetuate a fraud (like Enron) the auditors become a scapegoat. To focus
blame on the real cause, however, extra fees from other engagements essentially gives
the audit firm an economic interest in the survival of the company, which is actually
a greater stake than the shareholders (because of the creditor status of the claims).
Audit functions should be limited to the guardianship role.
Dave Schulte, BNí83
Kansas City Equity Partners
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