Former SEC chairman Harvey Pitt is warning accountants to watch their backs.

During a luncheon speech on Thursday at the New York State Society of CPAs’ Ethics Conference, Pitt decried the level of moral relativism among many financial firms and expressed his doubts about whether the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act would do much good at reining in Wall Street. He noted that after every financial crisis, Congress comes out with new legislation, as it did in 2002 with Sarbanes-Oxley in the wake of the Enron and WorldCom scandals, but that it did little good in preventing the financial crisis. He anticipates there will be many unintended consequences coming out of the 2,300-page bill, including potential problems with the investor advocate who will now be appointed at his old agency, the SEC.

Despite the shortcomings of the legislation, he believes accountants need to protect themselves. “In Washington, the name of the game is who can we blame,” he said. Accountants are often the targets, he noted, not only of the government, but of clients and their attorneys as well. Pitt, who is now CEO of consulting firm Kalorama Partners, advised accountants to be careful of any potential ethical violations and not to ignore any problems, even small ones, which they spot in a client’s financials and workpapers.

They should listen carefully to employees at companies who report problems to them, including unhappy and disgruntled employees, and not lightly dismiss them just because they may have an ax to grind.

Compensation arrangements need to be carefully scrutinized for their potential consequences and incentives. Like the Boy Scouts, Pitt advised CPAs to be prepared.