What has the accounting profession learned from this? Well, here's a bit of news coverage which is behind the "New York Times Select" pay wall, because a columnist happened to write it. A recent white paper issued by the American Institute of Certified Public Accountants discusses how accountants should act in due diligence meetings for potential underwriters of a company's stocks and bonds. And it poses the following question:
- Is it appropriate for an auditor to address questions from the underwriters regarding the auditor's awareness of any instances of fraud or illegal acts?
According to the Times's Floyd Norris
The answer was no. The paper adds that is true even if the company authorizes the auditor to disclose confidential client information. The answer suggests the question be referred to the company's management, which may not help if they are the ones suspected of fraud.
The white paper also says auditors should keep quiet if they hear management issue misinformation to underwriters, and should not tell them much of anything that is not already public information.
So this, evidently, is the lesson of the Enron scandals: keep your head down, bury the evidence, and maybe you won't get hurt. And if Andersen had acted like that... well, I guess they did.
Times Select article here, for those with access. It turns out that a lot of people are upset about this proposal, and a couple of them, at two different trade associations, were upset enough to leak this to Norris. Of course, this may be a case where the leakers are just as happy with the pay wall; the less potential scandal like this gets out to the hoi polloi who might ultimately be buying those stocks and bonds, the better, as far as the underwriters are concerned...