While the politicians seek answers and are somewhat relieved that attention has been diverted from their own political campaign contributions imbroglio, the guilty, the greedy, the criminal, the incompetent, the ignorant, and Andersen, which may encompass all of the previous, are squirming in their collective collaborative juices and pleading the Fifth.

 

Enron may possibly be the greatest Ponzi scheme ever perpetrated since Social Security. Enron was allegedly aided and abetted by Andersen and possibly high level expertise from Nigerian government ministries which had developed the art of sending confidential letters to millions of people asking for their bank account numbers so the ministry in question could transfer the victims' funds into offshore receptacles.  The only requirements were the banking account numbers and purchases of stock in energy trading partnerships which have no traceable losses or shell companies or indictable felonies of any kind and a supportive auditor.

 

There are positive factors in almost any situation, if one looks deeply enough. Andersen has made a quantum leap and has given the term "paperless office" a new meaning.  Ethical, honest and capable accountants must have the courage to stand firm and never sacrifice their own ethics to serve the client's bottom line. The CPA or other accounting professional must be wary and resolute when the client ignores what is recommended or, upon confronted with an unwanted finding, asks to take it out of the audit. 

 

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Remember, as a certified public accountant or other accounting professional, your own integrity is at stake. There comes a point where a client's unethical behavior shades into actions of questionable legality, which is vastly different than the gross felonies committed by the responsible guilty parties of Enron. While it is highly unlikely that you will find yourself dealing with people who are economic terrorists on a massive scale and employ a Big Five firm, it's not uncommon to find yourself as an independent accounting professional, dealing with small and medium-sized business clients who are looking for ways to skirt the law.  

 

The bottom line is that if you're ever called on to assist in some sort of illegal activity, you've got to get out. When a client asks you to perform acts that are clearly illegal or borderline according to your expertise and ethics, you have the right and obligation to resign for cause. The best way to avoid unhappy consequences is to be upfront and plan for difficult situations. Turn to the ethics committee at your state society of CPAs or the ethics function at the AICPA for guidance. Two articles worth reading on this topic are Andersen Introduces Yardsticks for Employee Ethics Programs and Professional Ethics for the CPA.

 

In addition, always utilize an Engagement Letter and employ some sort of problem resolution language and a notice procedure to specify how any potential conflict will be addressed. You can download selected sample engagement letters at the AICPA Web site.

 

When push comes to shove, you should listen and trust your savvy and feelings.  If you don't feel good about a potential client or a current client, it's probably a valid sign to pass on the prospective client or resigning the current client.  It costs you either way but when you haven't made the right choice, it costs you much more.