Fogarty Case Newacc

Career Management in a Post-Enron World
By Timothy J. Fogarty Just when you thought you knew what was what, it changes. The world of accounting has been shaken to its knees by the events that sent the Enron Company into bankruptcy and Andersen into oblivion over the past year. New legislation has been passed that will change the conduct of audits and the assignment of responsibility for financial reporting. But this is just the top of the iceberg. The Enron/Andersen scenario will have lasting effects that will include how you manage your career, and what you should expect to encounter along the way. Is there anyone out there that hasn’t at least a basic familiarity with the facts of the sudden fall of one of the larges corporations in the US , and the complicity of a venerable accounting firm? What at first looked like just another “audit failure” became an intricate web of corporate misdeeds and accounting shenanigans. Enron insisted upon an accounting, that to call aggressive, would be an understatement. Using a staggering set of “off balance sheet” entities, Enron could not survive a downturn in the economy and the erosion of their competitive advantage. Enron also employed a culture that featured hyper-entrepreneurism, selfishness and an “anything goes” ethos. Contrary to the spirit of auditor independence, Andersen facilitated or cooperated with Enron’s attempts to maintain what would eventually prove to be a house of cards. Andersen worked closely with Enron to produce financial reporting that was arcane and deceptive even if it was within the letter of Generally Accepted Accounting Principles. As concluded by a jury in Houston, Andersen obstructed justice in a case that featured a rampant document destruction that seemed to be motivated by impeding legal action.

You will be reading about the implications of these events for years to come. However, it may not be apparent that these include lessons that you can begin putting into practice while still in...