The Webcast, Enron: What Happened and Implications, designed to help professionals understand the accounting and finance issues pertaining to Enron, featured a three-member panel that included Teresa E. Iannaconi, Partner, Department of Professional Practice, KPMG LLP; Philip D. Ameen, Vice President and Comptroller, General Electric Company; and Jeffrey Peck, Partner, Griffin, Johnson, Dover & Stewart. Phil Livingston, President and CEO of FEI, moderated the Webcast.

Iannaconi outlined the major accounting issues that pertained to Enron's November filing that corrected previous financial statements and cut its profits over the past three years by 20 percent, causing investors and customer confidence to plummet and Enron to file for Chapter 11 bankruptcy on Dec. 2. 

Among the major issues, according to Iannaconi: accounting for nonconsolidated special purpose entities, hedge accounting, related parties transaction disclosures, the sale of stock in exchange for notes receivable, and accounting for fair value of certain transactions. Without drawing conclusions, Iannaconi stated these are the issues that should be the topic of discussion as the Enron investigations probe into the books and estimate how the numbers contributed to the company's collapse.

As a board member of General Electric Company, Ameen focused on the implications the Enron debacle has had on employee confidence. He summarized the chaotic and troubling time this is for the industry when he stated, "It's not a good time to be an accountant or to be in finance."

Ameen suggested companies circulate their code of ethics and discuss concerns and issues with employees. He emphasized that in order for employees to feel they can openly communicate with management when they have a concern, companies must rethink and re-examine the way they react to "whistle blower kinds of activities." It is "very important that we be open and the employees feel they can be responded to in a fair fashion," he added.

Peck, whose firm currently represents Andersen on ongoing matters related to Enron, made a pointed statement regarding how broadly the accounting community has been influenced by the scandal: "Accounting has moved from the business pages to the front pages."

Indeed, the mess has sparked a dozen hearings in Washington that have begun or are slated to begin soon, some on the investigative side with most regarding policy.

The major topics of discussion, according to Peck, include the issue of auditor independence. Certainly not a new debate, Peck expects to see more changes in this area by either regulation or legislation. 

Peck also expects more debate on 401k -- given the Enron situation where many of its employees lost their entire retirement savings due to now worthless Enron stock -- and how likely it is that this can occur in more companies in the future. For instance, how do company policies restrict employees from diversifying their portfolio?

Another issue at the top of the list, according to Peck, is the questionable future of the Financial Accounting Standards Board regulatory body. Questions about its efficiency and standards setting have prompted former SEC chairman Arthur Levitt to recommend to a Congressional committee that the makeup of FASB policy makers be re-examined. 

With so many issues to face -- corporate control, employee and consumer confidence, accounting policies, Congressional hearings, and the politics of the accounting profession -- the panel, each representing a different facet of the Enron debacle, concluded this would be a topic of conversation for at least the next year.

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This Webcast qualifies for one CPE credit. An access fee of $60 for FEI members and $75 for others applies. Click here to sign up.