IMGCAP(1)]Well, it was nice while it lasted.
It's been around a decade since we last saw cover photos of an accountant doing a perp walk. We even got through the economic catastrophes of recent years with surprisingly few cries of, "Where were the auditors?"
Turns out that at least one of those auditors, former KPMGer Scott London, was in a parking lot picking up envelopes of cash for divulging client secrets, and once more we're treated to the sort of front-page pics we haven't seen since Enron's Andrew Fastow was making news.
The question is, what does it mean for the profession? Will he tarnish accounting's public image?
Given its hard-earned and much-trumpeted reputation for integrity, there will always be a certain prurient over-interest in stories of accountants committing economic crimes -- it's the equivalent of a policeman running a drug ring, or teachers cheating on tests. And there will always be those who are too quick to extrapolate from individual cases, as if Scott London is somehow representative.
Simply put, he is not.
The likelihood of more such cases being uncovered in the profession in the near future seems low, at least to me. No doubt there is a great deal of furious activity at many firms right now, from new ethics training to double- and triple-checking of investment portfolios for conflicts of interest, and while it will probably uncover many minor violations of policy and small lapses in judgement, I don't expect it to yield much, if anything, in the way of actual crime.
The fact is that London's crime is an outlier, and doesn't reflect on the profession in any significant way. A decade ago, Fastow and his fellow chief-financial-officers-gone-wrong illustrated the pressures that many corporate finance officers face to cook the books, while the Andersen debacle highlighted the inherent complications and conflicts of the auditor-auditee relationship as it's currently constructed. But the London case illustrates nothing, explains nothing, exemplifies nothing (except, perhaps, that greed can make apparently intelligent people do surprisingly sleazy things in parking lots).
Unless I'm wrong and a large number of CPAs turn out to be engaged in insider trading, this will not stain the profession. That does not mean, however, that it doesn't raise some very interesting questions for firms of all sizes.
As noted, many of the larger firms are undoubtedly revisiting their internal policies, vetting staff, and otherwise redoubling their vigilance, to stay on the right side of regulations and protect their integrity.
But every firm has access to confidential client information. From Fortune 1000 earnings reports down to the tax return of the guy across the street, accountants have access to a vast amount of private data, much of which is potentially valuable.
How carefully are you safeguarding all of that? How often do you remind staff not to leave thumb drives and laptops lying around, or not to discuss client matters in public? What kind of IT security do you have in place? How often do you discuss ethics, and your firm's responsibilities regarding client privacy?
With most of these issues, it should be noted, the worry isn't that one of your accountants will break bad; it's more about malign influences outside the firm, or simple carelessness inside it. In the end, though, all those are part and parcel of a message that needs to be reinforced from time to time: You are stewards of an immense amount of other people's information, and you have a responsibility to protect it against theft, against unintentional loss -- and even against yourselves and your own staff.
Scott London is most likely the sole rotten apple -- but that doesn't mean you shouldn't check the barrel.
