For the past year, the image of accountants and accounting firms have been undergoing an involuntary makeover following the storm of accounting scandals. This week, it got personal.
The estranged wife of Ernst & Young chief executive Richard S. Bobrow, not content to accept a million-dollar settlement from her husband in their divorce case, laid bare in public court documents exactly how much her hubby earned partly by showing how much E&Y valued its former consulting practice, and the exact amount of its total capital.
Accounting firms don’t normally disclose such information as a matter of course, but as Accounting Today’s annual Top 100 Firms shows, most firms are willing enough to publicly air some financial information, especially if it earns them a top berth on the list.
So the New York Times’ breathless lead claiming that the firm’s "closely guarded financial secrets" were pried open by a divorce case isn’t as earth-shattering as it might initially seem.
Sure, divorce lawyers with high net worth clients are probably salivating at the prospect of this becoming a landmark case that could set the bar for what a top partner at an accounting or law firm is worth.
But as accounting firm consultant Allan Koltin noted, the most embarrassing and potentially damaging information in the story is that a top executive at E&Y allowed his personal life to get so messy that it dragged his firm’s name through the dirt.
The outcome of all this disclosure is that the ante will probably be raised on what partners at accounting or law firms will be willing to pay out to their soon-to-be ex-husbands or wives to make sure such information doesn’t become public.
Either way, they’ll lose, but the next firm targeted might at least be able to save some face.
