In speaking to accountants about Enron, I have been a bit surprised by what is being said and the fact that many feel it will actually help them to solidify further the relationships with their clients. In almost all of these discussions, the practitioners initially expressed interest in finding out what Andersen knew, when they knew it, and how high up did it went in the firm. But something much more interesting surfaces as we talked.


The Big Five are seen as a completely different animal. There is a belief that they do not really know the operational nuts and bolts of the companies that they audit. That rather they have a detailed understanding of the systems that are used by the business to run their many divisions. The reasoning is that because these multinational companies are so large and diverse, it is virtually impossible to really delve in great depth beyond the systems that are being used.


This is seen in marked contrast to how CPAs feel about themselves. There is a belief, that unlike the Big Five, they are thoroughly conversant in the details of the internal day-to-day operations of the businesses that they advise. And what are these accountants hearing from their clients? Not criticism of accountants, but comments like "How could Andersen have allowed this to happen?"


So here is the upside to Enron. Accounting firms are able to distinguish themselves from Andersen and with all the bad press that Andersen is getting, that becomes an imperative. In addition, accountants are telling me that that they expect their clients will now be more receptive to critical advice. Clients understand even better the need for independence on the practitioner's part and the danger of having an accountant who acts as a rubber stamp.


After all, quite often the best advice that an accountant gives clients is telling them what not to do. Following Enron, I think clients will listen a whole lot closer to what their accountant is saying. In the long run, that will be best for them and the CPA.

-Howard Wolosky

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access