RSS
Print This Post Print This Post

Larry Katzen – Perspectives – REAL Business

Larry Katzen

A Business World Massacre –

What Can Happen When Government Needs A Scapegoat

By Larry Katzen

It remains one of the greatest travesties in the history of American business: In 2001, the 85,000 employees of one of the world’s largest accounting firms began losing their jobs in droves. Their employer had become tainted by its loose association with Enron Corp., a financial house of cards that was imploding and taking with it billions of dollars in employee pensions and shareholder investments.

In 2002, accounting firm Arthur Andersen was convicted of charges related to Enron’s fraudulent practices. The charges had nothing to do with the quality of their auditing – or any of Enron’s illicit practices. The conviction was appealed, and in 2005, the U.S. Supreme Court struck it down in a unanimous vote.

But the damage had already been done.

To date, despite millions of records being subpoenaed, there is no evidence Arthur Andersen ever did anything wrong. Still, perceptions are everything: Most people are not aware that the accounting firm, which led the industry in establishing strict, high standards, became a government scapegoat.

When I speak to groups across the country, I ask the following questions. Below are the typical responses I receive – and the actual facts.

1. What do you remember about Arthur Andersen?
Typical Response: They were the ones that helped facilitate the Enron fraud. They deserved what they got.
Fact: Arthur Andersen was the largest and most prestigious firm in the country. It was considered the gold standard of the accounting profession by the business community.

2. For what was Arthur Andersen indicted?
Typical Response: They messed up the audit of Enron and signed off on false financial statements.
Fact: They were indicted for shredding documents. These documents were drafts and other items that do not support the final product. All accounting firms establish policies for routinely shredding such documents.

3. How long was it between the Enron blowup and when Arthur Andersen went out of business?
Typical Response: One to three years.
Fact: The largest accounting firm in the world was gone in 90 days.

4. Was the indictment upheld?
Typical Response: Yes, that is why they went out of business.
Fact: No. The Supreme Court overruled the lower court in a 9-0 decision, and came to the conclusion within weeks, making it one of their quickest decisions ever.

5. How many people lost their jobs as a result of the false accusations?
Typical Response: Have no idea, but the partners got what they deserved.
Fact: Eighty-five thousand people lost their jobs and only a few thousand were partners. Most were staff people and clericals who made modest sums of money.

6. Who benefited from Arthur Andersen going out of business?
Typical Response: Everyone – we finally got rid of those crooks and made a statement to the rest of business to operate ethically.
Facts: It was not the Arthur Andersen people; they lost their jobs. It was not the clients; they had to go through the stress and expense of finding a new auditing firm. It was not the business world in general: It now has fewer firms from which to choose and rates increased. It was their competitors who benefited– they got Andersen’s best people and clients and were able to increase their rates and profitability.

7. What accounting firms now have ex Arthur Andersen partners playing leadership roles in their firms?
Typical Response: None
Facts: The “big four,” all the large middle-tier firms and many small firms have former Arthur Andersen partners in leadership positions. Finally, many members of the new Public Accounting Oversight Board (PCAOB), which oversees these firms, now have former Arthur Andersen people involved in reviewing the quality of these firms.

Larry KatzenLarry Katzen, author of “And You Thought Accountants were Boring – My Life Inside Arthur Andersen,” (www.LarryRKatzen.com), worked at Arthur Andersen from 1967 to 2002, quickly rising through the ranks to become a partner at age 30. His new memoir details the government’s unjust persecution of a company known for maintaining the highest standards.

Copyright © 2017 REAL Exclusive Magazine www.getrealexclusive.com
Links to this article are encouraged

Share

Tags:

Leave a Reply


Featured Properties

Ads

REAL HAPPENINGS

Happy Father's Day Dad!

Happy Father's Day Dad!

Ed Sr. - 88 And Not Stopping! Happy Father's Day Dad! Father's Day The holiday was first intr[...]
June 21, 2018 Classic Movies at the Sarasota Opera House

June 21, 2018 Classic Movies at the Sarasota Opera House

Sarasota Opera House Presents All About Eve (1950). Thursday, June 21st at 7:30pm $10 A story[...]
June 16, 2018 Atlanta Braves Spring Training Launch Party

June 16, 2018 Atlanta Braves Spring Training Launch Party

Join the Atlanta Braves in celebrating their new Spring Training facility in North Port! They wil[...]
July 4, 2018 Grand Prix Bayfront Fireworks Spectacular

July 4, 2018 Grand Prix Bayfront Fireworks Spectacular

2018 Sarasota Powerboat Grand Prix Festival Bayfront Fireworks Spectacular. For the complete list[...]
July 1, 2018 Grand Prix Race Team Awards Presentation

July 1, 2018 Grand Prix Race Team Awards Presentation

2018 Sarasota Powerboat Grand Prix Festival Race Team Awards Presentation. For the complete list [...]
July 1, 2018 Grand Prix VIP Race Viewing

July 1, 2018 Grand Prix VIP Race Viewing

2018 Sarasota Powerboat Grand Prix Festival VIP Race Viewing. For the complete list of event info[...]
July 1, 2018 Grand Prix Races

July 1, 2018 Grand Prix Races

2018 Sarasota Powerboat Grand Prix Festival Superstock, Production Class & Personal Watercraft Races[...]
July 1, 2018 Grand Prix Fan Fest

July 1, 2018 Grand Prix Fan Fest

2018 Sarasota Powerboat Grand Prix Festival Fan Fest. For the complete list of event information [...]
June 30, 2018 Grand Prix Races

June 30, 2018 Grand Prix Races

2018 Sarasota Powerboat Grand Prix Festival Superstock, Production Class & Personal Watercraft Races[...]
June 30, 2018 Grand Prix Fan Fest

June 30, 2018 Grand Prix Fan Fest

2018 Sarasota Powerboat Grand Prix Festival Fan Fest. For the complete list of event information [...]
June 30, 2018 Grand Prix Festival Motorcycle Charity Ride

June 30, 2018 Grand Prix Festival Motorcycle Charity Ride

2018 Sarasota Powerboat Grand Prix Festival Finz Finds "Coastal Cruise" Motorcycle Charity Ride. [...]
June 29, 2018 Grand Prix Festival Miss Powerboat Swimsuit Contest

June 29, 2018 Grand Prix Festival Miss Powerboat Swimsuit Contest

2018 Sarasota Powerboat Grand Prix Festival Miss Powerboat P1 Swimsuit Contest. For the complete [...]
June 29, 2018 Grand Prix Festival Boats By The Bay Party In The Pits

June 29, 2018 Grand Prix Festival Boats By The Bay Party In The Pits

2018 Sarasota Powerboat Grand Prix Festival Boats By The Bay Party In The Pits. For the complete [...]
June 7, 2018 Classic Movies at the Sarasota Opera House

June 7, 2018 Classic Movies at the Sarasota Opera House

Sarasota Opera House Presents The Wizard of Oz (1939). Thursday, June 7th at 7:30pm $10 A tor[...]
June 29, 2018 Grand Prix Festival Meet And Greet

June 29, 2018 Grand Prix Festival Meet And Greet

2018 Sarasota Powerboat Grand Prix Festival Race Teams Meet & Greet. For the complete list of eve[...]
June 28, 2018 Grand Prix Festival Kickoff Party

June 28, 2018 Grand Prix Festival Kickoff Party

2018 Sarasota Powerboat Grand Prix Festival Grand Prix Kickoff Party. For the complete list of ev[...]
June 27, 2018 Grand Prix Comedy Night

June 27, 2018 Grand Prix Comedy Night

2018 Sarasota Powerboat Grand Prix Festival Grand Prix Comedy Night. For the complete list of eve[...]
June 27, 2018 The Friendliest Catch Fishing Tournament

June 27, 2018 The Friendliest Catch Fishing Tournament

2018 Sarasota Powerboat Grand Prix Festival "The Friendliest Catch" Fishing Tournament. For the c[...]
June 24, 2018 Boat And Personal Watercraft Fun Run

June 24, 2018 Boat And Personal Watercraft Fun Run

2018 Sarasota Powerboat Grand Prix Festival Boat And Personal Watercraft "Fun Run". For the compl[...]
June 24, 2018 Annual Car Show

June 24, 2018 Annual Car Show

2018 Sarasota Powerboat Grand Prix Festival Car Show. For the complete list of event information [...]
Translate »