Enron Updates on March 25, 2002
Bob Jensen at Trinity University

Bob Jensen's main document on the Enron scandal and other accounting frauds is at http://www.trinity.edu/rjensen/fraud.htm 


The sudden collapse of Enron has prompted investors to demand greater transparency, and companies are responding by expanding their annual reports. Every company has its own unique disclosure challenges, but corporate giants General Electric and IBM are clearly at the forefront when it comes to complexity. These same companies are also clearly raising the bar when it comes to voluntary corporate reporting. http://www.accountingweb.com/item/74828 


Perhaps this is one of the first steps toward allowing investors to view financial databases.

"GE's Annual Report Bulges With Data In Bid to Address Post-Enron Concerns," 
The Wall Street Journal
, March 11, 1002, Page A3
By Rachel Emma Silverman
It isn't as thick as the New York City phone book, but General Electric Co.'s 93-page 2001 annual report contained more details than in previous years -- and it may set a standard for other firms being pressured to expand their financial disclosure.

At a time when investors crave corporate nitty-gritty, hoping it will protect them from Enron-like surprises, GE said its report had 30% more financial information than the year before. Primarily, GE provided more specific data about 26 individual businesses, from its industrial units as well as GE Capital, compared with just 12 business segments for 2000. Among other companies that have promised greater disclosure in reports are International Business Machines Corp., American International Group Inc. and SunTrust Banks Inc.

In one of the most striking changes, GE included a special section about its use of "special-purpose entities." GE said it held a total of $56.41 billion of assets in special-purpose entities for 2001, up from $41.20 billion the prior year. GE's assets in these entities included $43.01 billion of receivables such as credit-card loans and equipment leases, which are packaged into diversified, asset-backed securities that are sold to investors. Additionally, GE holds $13.4 billion of such assets in entities that offer investment contracts with municipalities.

For many companies, including GE, off-balance-sheet arrangements are a standard business practice. GE has disclosed information about such entities in prior annual reports, although in footnotes or in line items within financial tables. "Frankly, pre-Enron it never received the degree of interest and concern as it has since then," spokesman David Frail said.

In the latest report, GE went out of its way to distinguish its off-balance-sheet practices from Enron's. The company said none of its entities were permitted to hold GE stock, and "there are no commitments or guarantees that provide for the potential issuance of GE stock," the report said. Moreover, "these entities do not engage in speculative activities of any description, are not used to hedge GE or GE Capital Services positions, and under GE integrity policies, no GE employee is permitted to invest in any sponsored special-purpose entity," the report said.

The disclosures tell investors "why these entities are important to the business model of GE," says Paul R. Brown, chairman of the accounting department at New York University's Stern School of Business. "They're saying, 'I know this particular financing model was tainted when it comes to Enron, but you know what -- it works for us.' "

Overall, analysts welcomed GE's decision to open its books more widely. "GE has definitely raised the bar for all corporate reporting," says William Fiala, an analyst with Edward Jones. However, he and others wonder whether GE could have gone further by releasing more information about the impact of acquisitions on earnings and greater details about losses, charges and receivables, among other details, within individual businesses in its large GE Capital Services financing arm.

GE's revamped disclosure gave a clearer picture of strong and weak performers within GE Capital. Within the specialized-financing segment, GE Real Estate had a strong year, with $486 million in earnings. GE Equity, in contrast, had a $270 million loss. However, the report doesn't provide details about GE Equity's portfolio and which investments produced losses. A GE spokesman said portfolio information was available on the unit's Web site. It was also difficult to tell from the report which individual businesses took charges within GE Capital -- although that was broken down on a segment level -- and the amount and nature of receivables for each business.

One area that didn't satisfy critics was the treatment of acquisitions. Several analysts called for details about what portion of GE's earnings comes from acquisitions as opposed to underlying operations.

"I would like more of a discussion of organic growth, excluding the impact of acquisitions," said John Inch, an analyst with Bear Stearns, although he called the annual report "an important step." GE announced nearly $23 billion in acquisitions during 2001. It says it discloses all acquisitions during the year.

"At what point does an acquisition become part of underlying operations?" asks GE spokesman Mr. Frail. "There are some challenges and ambiguity in measuring what effect and impact that people are looking for." He adds that disclosure "is a process, and we'll be listening to everybody. But we have to measure the sheer volume of work against the value to investors of the information."

Still, additional financial disclosures may be on the way. GE is considering releasing the impact of pension income in its quarterly earnings reports, which the company hasn't broken out before, although it does so in its annual report. GE also plans to separate the impact of pension income in its individual operating units and report pension income at the consolidated level.

GE changed its pension estimates for this year. It expects its post-retirement plan to contribute about $700 million to pretax earnings, compared with $1.48 billion for 2001. GE expects post-retirement costs to rise this year, because of a reduction in the assumed annual return on assets to 8.5% from 9.5%, a reduction in the discount rate to 7.25% from 7.5% and increases in health-care costs.

The annual report disclosed the company expects a charge of $1 billion, or 10 cents a share, for the first quarter of 2002, related to a rule that changes the accounting of goodwill, the difference between the purchase price of an asset and its book value.

GE's proxy statement, also released Friday, said retired Chairman and CEO John F. Welch Jr. received more than $16 million in total compensation during 2001 -- nearly $3.4 million in salary and a $12.7 million bonus. Current Chairman and CEO Jeffrey Immelt was paid about $6.4 million in total compensation, including nearly $2.8 million in salary and a $3.5 million bonus.

The proxy disclosed that GE paid KPMG LLP, its auditor, $23.5 million for auditing services and $37.1 million for other services, including tax services and due-diligence procedures for mergers and acquisitions. GE said it doesn't use KPMG for internal audit work.

From The Wall Street Journal Accounting Educators' Review on March 14, 2002

TITLE: GE's Annual Report Bulges With Data In Bid to Address Post-Enron Concerns 
REPORTER: Rachel Emma Silverman 
DATE: Mar 11, 2002 
PAGE: A3 LINK: http://online.wsj.com/article/0,,SB1015622451989914320.djm,00.html  
TOPICS: Advanced Financial Accounting, Consolidation, Accounting, Disclosure, Disclosure Requirements, Financial Accounting, Financial Statement Analysis, Regulation

SUMMARY: General Electric Co. issued a 93-page 2001 annual report containing more details about its operations than the annual reports issued by GE in previous years. Some argue that the increased reporting by GE may set a new standard for financial reporting.

QUESTIONS: 
1.) List three things that are different about GE's 2001 annual report. Why did GE choose to make these changes? Are the additional disclosures made by GE required under Generally Accepted Accounting Principles? Support your answer.

2.) List three advantages and three disadvantages of increasing the quantity of disclosure contained in annual reports. Should companies be required to disclose more information? Support your answer.

3.) Who are the primary users of information contained in annual reports? Discuss the ability of these users to process detailed financial statement information.

4.) What is the role of financial analysts in financial reporting? Do financial analysts face any conflicts of interest when interpreting financial results? Does providing more information in financial reports improve the quality of information available to unsophisticated investors? Support your answer.

SMALL GROUP ASSIGNMENT: If you support increased disclosure requirements by Generally Accepted Accounting Principles, propose three standards that would require increased disclosure. How would your proposed standards increase the usefulness of financial reporting?

If you do not support increased disclosure requirements by Generally Accepted Accounting Principles, defend existing standards.

Reviewed By: Judy Beckman, University of Rhode Island 
Reviewed By: Benson Wier, Virginia Commonwealth University 
Reviewed By: Kimberly Dunn, Florida Atlantic University

Bob Jensen's threads on proposed accountancy profession reforms in the wake of the Enron scandal are at http://www.trinity.edu/rjensen/FraudProposedReforms.htm


The U.S. Department of Justice on Thursday announced that a federal grand jury has indicted Big Five firm Andersen on charges of obstruction of regulatory and criminal proceedings as a result of document destruction relating to the audit of Enron Corporation. http://www.accountingweb.com/item/75137 


Roger Collins informed me about this Financial Times article.

A global reputation falls apart Andersen's fall from grace shows that companies are judged on what they do, not what they say their values are, says Peter Martin, Financial Times, March 18 2002 --- http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT37MQHQYYC&live=true 

Shakespeare was right. Andersen's continuing implosion shows that once reputation is lost, the immortal essence of a business goes too: the goodwill that it can pass on to the next generation, the ties that bind colleagues together, the intangible virtues of its good name.

What remains is, if not bestial, then certainly all too human: the scramble for self-protection, the emergence of regional rivalries, the triumph of sauve-qui-peut.

Accountants are watching Andersen's struggles with astonishment and fear. Although they have always known how important reputation was to their business, the speed with which the firm has started to unravel has taken everyone by surprise.

Some of the lessons of the Andersen story are specific to the audit business. Others are of general relevance to professional service firms and indeed to any business built on human capital and a global network of knowledge workers.

Of the many lessons, I have selected five:

* Bad judgment will hurt you but a cover-up is lethal. Andersen has admitted mistakes in its audits of Enron and the quality of its work has been criticised by US regulators in three other instances. If that were the firm's only problem, it would not be in such a desperate situation today. The haemorrhage of clients would have been at manageable levels and there would be enough time to negotiate a sale to the best bidder.

What has left the firm scrambling to find a future is not the original audit errors but the perceived cover-up, the shredding of documents and the destruction of e-mails.

Even if Andersen's Houston office was doing no more than ensuring - as other accounting firms also do - that the permanent record of its audit was uncluttered by hypothetical questions or internal debate, the shredding looks bad. The fact that it occurred after the well publicised launch of an informal investigation by the Securities and Exchange Commission is also hard to defend.

Shredding is easy to explain to a grand jury in pursuit of a criminal indictment; the consolidation test for special purpose entities is not.

So the first lesson of the Andersen case, one that applies to every type of business, is: avoid any perception of a cover-up. Do not permit, and above all do not encourage, any sort of destruction of records once an investigation is getting under way, no matter how tentative it is.

* Your values are what you are willing to enforce. I owe this insight to David Maister, author of Managing the Professional Service Firm*. It is all very well, he says, drawing up carefully crafted value statements and ethics codes. All professional services firms do. They are often meaningless.

What count are the non-negotiable minimum standards that the firm is prepared to fire people over. This is not a piece of moralism, simply a commercial issue.

If, as the Andersen indictment** alleges, "the Andersen team handling the Enron audit directly contravened the accounting methodology approved by Andersen's own specialists working in its Professional Standards Group", that is a clear indication of what Andersen's head office was and was not prepared to enforce - and thus what its ultimate values were.

* Rethink the professional services business model. This is another Maister point. Cross-selling between audit and non-audit parts of accounting firms has always produced much less business than is commonly believed, he says.

Yet accountants continued to defend the practice, even though audit was the least profitable part of the business. Maister's solution is that accountants should spin off their audit arms and keep their consulting business - the reverse of the commonly accepted wisdom.

You do not have to accept that logic to see that the concept of a professional services supermarket is inherently vulnerable to reputational damage and probably less fruitful than its defenders suggest.

Whatever its strengths or weaknesses, it will probably not survive the Andersen case. Which leaves big accounting, consulting and law firms - all of whom have bet their futures on this vision - scrambling to find a new strategy.

* Human capital can walk. Andersen's undignified scramble to survive over the past few days has been made much harder by the fact that its principal asset (other than its now tarnished name) resides in the heads of its employees.

When a manufacturing company is threatened by scandal, its employees cannot simply walk off with the machinery. But an accounting firm - or an advertising agency, or a consultancy - does not really own the intellectual capital on which it runs.

In spite of all the talk of knowledge as a corporate asset, it remains firmly in the possession of individuals. And they can negotiate alternative futures for themselves that may not match up with those designed at head office.

* The network is the business. This is the offsetting factor that prevents Andersen simply splitting up into its constituent national elements.

Big company audits require global reach and a common set of standards and practices. Today's global Andersen possesses these; potential national successor firms do not. Individual groups of partners can certainly find employment elsewhere - but on terms that reflect merely their own skills, not their value as members of a collaborating network.

The network issue arises in a particularly strong form at Andersen. Its legal problems arose in the US, the most important global economy and one on which Andersen was particularly dependent for historical reasons. Without the US firm, the value of Andersen's network is seriously weakened.

So the rest of the firm could not simply slough off the US partnership and continue without it - as it might have been able to do if the issue had arisen in any other country. This made a future independent existence unlikely.

Big businesses increasingly owe their value to their status as global networks. The Andersen experience is relevant well beyond the borders of the professional services firm.


FedEx, Riggs Bank, Household International, and Kerr-McGee added their names this week to the long and growing list of former Andersen audit clients who are opting to purchase their audit services from other accounting firms. For those of you who are trying to keep score, here are the defections and the winning other Big Five CPA firms who have gained Andersen's clients. http://www.accountingweb.com/item/74745 


Differences of opinion between House Democrats and Republicans have resulted in the introduction of a second bill in the House Financial Services Committee. Known as the Comprehensive Investor Protection Act, this new proposal is the toughest accounting reform bill yet. It was the result of close coordination with the Securities and Exchange Commission, and it is supported by the AFL-CIO, consumer groups, and former SEC Chief Accountant Lynn Turner. http://www.accountingweb.com/item/73861 

Differences of opinion between House Democrats and Republicans have resulted in the introduction of a second bill in the House Financial Services Committee. Known as the Comprehensive Investor Protection Act (CIPA), this new proposal is the toughest accounting reform bill yet. It was the result of close coordination with the Securities and Exchange Commission (SEC), and it is supported by the AFL-CIO, consumer groups, and former SEC Chief Accountant Lynn Turner.

Among other things, CIPA would:

In introducing the bill, Representative John LaFalce said, the reforms are not "cosmetic" and do not "paper over the problem." Georgetown University law professor Donald Langevoort told Reuters, "If it were just the little guy who got trounced [by the Enron collapse], we would simply get cosmetic changes. But this has hurt more than the little guy."

Read the news release. Read the summary of the bill. View a side-by-side comparison with the bill introduced by the House Financial Services Committee Republicans.

The American Institute of CPAs is building a lobbying campaign against Enron-related reform proposals being discussed in Washington and demanded by the private sector. According to an AICPA spokesman, an e-mail was distributed to 3,000 federal key people - AICPA members who have contact and/or access to lawmakers - urging their assistance in convincing lawmakers to temper the response to requests for reforms. http://www.accountingweb.com/item/74169

The lobbying coalition of accountants formed by the American Institute of Certified Public Accountants and the Big Five firms is short one firm today as the group has voted to sever ties with Andersen for the time being. The group, which typically presents a united front when lobbying for issues before Congress, has agreed to let Andersen fight its own battles for now. http://www.accountingweb.com/item/73994 

Also see http://www.house.gov/banking_democrats/pr_020228.htm 


President George Bush has introduced a ten-point plan to improve corporate responsibility and protect America's shareholders. For the most part, the plan endorses reforms already suggested by the Securities and Exchange Commission. Reactions to the plan were mixed. http://www.accountingweb.com/item/74564 


Barry C. Melancon, president and CEO of the American Institute of CPAs, was a key witness at the March 13 hearing on the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 (CARTA). CARTA proposes relatively modest changes compared with other bills, and it is believed to be the bill most supported by the accounting profession. http://www.accountingweb.com/item/74940 


On March 1, 2002 in the wake of the Enron scandal and FASB hearings, the FASB wrote a summary report of SPE accounting at http://www.fei.org/download/FASB_SPE.pdf 

Often these structures are used to finance specific assets or a revolving asset base transferred to the SPE. The transfer of trade receivables, loans, or investment securities to the SPE would generally be followed by the SPE’s issuance of debt to investors secured by the transferred assets. The borrower/transferor gains access to a source of funds less expensive than would otherwise be available. This advantage derives from isolating the assets in an entity prohibited from undertaking any other business activity or taking on any additional debt, thereby creating a better security interest in the assets for the lender/investor. SPE financing structures issue many forms of asset-backed securities, including collateralized bond, debt, and loan obligations; and trade receivable commercial paper conduits.

An SPE might be the lessor of a property built for the specific needs of an identified lessee, such as a power plant or a production facility. These transactions are often referred to as synthetic leases and provide tax-advantaged financing lower than traditional mortgage loans. Another form of tax-advantaged SPE transaction is the sale to an SPE of an asset that qualifies as a financing under tax regulations, with any gain on sale deferred for tax purposes. These are known as debt-for-tax transactions.

Bob Jensen's SPE accounting threads are at http://www.trinity.edu/rjensen//theory/00overview/speOverview.htm 


Response of the Andersen accounting firm to Harvey Pitt's proposed Oversight Board
I thank Dennis Beresford for the tip on the document below.

This response is from the Andersen document at  http://www.andersen.com/website.nsf/content/MediaCenterIOBfirstreport!OpenDocument&Email=True

Independent Oversight Board — Report I

March 11, 2002

This report describes the first decisions reached by the Independent Oversight Board with respect to the basic structure, policies and practices of Arthur Andersen LLP and related organizations.

Taken as a whole, the Board believes these decisions can provide a framework for assuring the priority, the independence and the integrity of the Andersen auditing practice. It believes the conclusions are consistent with the responsibilities of the profession to the investing public.

Taken together, the decisions with respect to internal practices and policies and the structure of the Andersen partnerships are designed to recognize and enhance the basic responsibility of the auditing profession in general and of Andersen in particular to its clients and to the investing public. The efficient allocation of capital and the integrity of financial markets rests in substantial part on uniform, reliable and clear financial reporting, consistent with generally accepted accounting principles and attested to by independent experts.

In making its decisions, the Board has given great weight to the need, in conducting audits, to avoiding the reality or appearance of conflicts of interest that might otherwise arise in firms offering a variety of services. It also recognizes that effective auditing of financial statements requires strong professional discipline, effective training in the complexities of modern finance, and clear recognition of the need for timely, accurate and comprehensive reports to the investing community.

There have been lapses in achieving these goals in this country and elsewhere. The difficulties are not confined to Andersen, or to auditing firms, alone. Matters of corporate governance, of regulation and other professional responsibilities surely deserve attention. But it is the hope and conviction of the Oversight Board that the policies and practices set out for Arthur Andersen LLP and related entities could, when implemented, enable that firm to play a leading role in a profession strongly responsible to the public interest.

Structural organization The Independent Oversight Board outlines a new structure for Andersen LLP and related partnerships that will clearly recognize the priority of protecting the independence of the auditing function:

Specifically:

1. Consulting with respect to substantial Information and Communication Technology (ICT), strategic planning, the practice of law, organized executive recruitment, and certain areas of “aggressive” tax planning and advocacy unrelated to auditing should be separated into partnerships managed independently from auditing partners and without financial interdependence.

[Explanatory note: In Europe and most other areas, these consulting functions are already carried out in legally separate partnerships. In the U.S., these functions have been performed within Andersen LLP. Consequently, Andersen LLP will need to be reorganized to achieve the separation.]

2. The individually organized national auditing partnerships can maintain international contractual linkages among themselves.

3. Similarly, the national consulting partnerships will be free to maintain international linkages.

4. For a transitional period, a common service company may be established to maintain needed computer and other existing technical support functions and to assist in the orderly termination of the existing contractual relationship among some 100 existing Andersen-related partnerships.

5. As this reorganization is completed, there will be no partner interlocks, no revenue or profit-sharing, and no cross-subsidies between the “auditing” and “consulting” partnerships.

Auditing discipline The Oversight Board believes certain clear organizational principles need to be firmly established within Arthur Andersen LLP and related auditing partnerships:

1. A strong expert analytic and technical group of senior partners must have central and unambiguous authority over new and difficult interpretations of accepted accounting standards.

2. In making these determinations, the emphasis should be placed on respecting the clear intent of the standard.

3. Engagement partners and regional managers should refer difficult or ambiguous questions to the central group for its resolution.

4. A designated group of senior partners should have authority to resolve issues of client solicitation and retention, with clear documentation of decisions.

5. Engagement partners should be rotated at intervals of no more than five years.

6. Emphasis in compensation of auditing partners and staff should be placed on effective auditing, management and training performance and skills, and should not provide incentives for solicitation and marketing of non-audit related services.

7. Partners should respect a suitable “cooling off” period before seeking or accepting employment with an audit client.

8. To encourage cohesiveness, coordination and clear lines of responsibility, the senior managing partners should be encouraged to maintain their offices at a central location.

9. A continuing public review body, succeeding the present Independent Oversight Board, should be established with responsibility for at least annual review of the quality and independence of audits.

Audit-related services Certain services closely and traditionally connected with the auditing practices of public companies can reasonably be maintained consistent with the desired priority to, and independence of, the auditing function. The provision of certain of these services to an audit client should be dependent upon the clear and considered agreement of the directors and particularly the audit committee of the client company. Partner and partnership remuneration practices should be comparable to that of the audit practice, without “contingency” or “success” fees.

1. Tax preparation, record keeping and compliance, including review of tax policies that may affect the integrity of the financial reports.

2. “Due diligence” in contemplation of mergers or acquisitions or other purchases.

3. Valuation of assets and auditing of employee benefits to the extent permitted by regulation.

Other services should be confined to non-audit clients:

1. Outsourcing of internal auditing and accounting work.

2. Executive client tax and accounting services.

3. Limited ICT design and implementation for small and medium-sized business.

These changes, which are intended to supplement existing regulation, will necessarily take time to implement in an orderly manner. The Oversight Board, with the assistance of its Advisory Panel, intends to review the process, as well as determine further steps that may be necessary.

One implication of the approach set forth is that client companies, their directors and audit committees, and their top management must recognize their interest in quality auditing provided without potentially conflicting interests. They must be willing to provide appropriate compensation for quality and independent audits.

The Oversight Board also recognizes that success in the entire effort will rest on the talent, commitment and strong sense of integrity by the partners and staff of the entire Andersen organization. That organization has had a proud heritage of superior technical competence and leadership. The Oversight Board looks forward to the restoration of that leadership

Bob Jensen's threads on proposed accountancy profession reforms in the wake of the Enron scandal are at http://www.trinity.edu/rjensen/FraudProposedReforms.htm 


Hi Roger,

What perfect timing. I leave for Denver tomorrow to be on a presentation panel with Steve Zeff. Thank you so much for this lead.

Bob Jensen

-----Original Message----- 
From: Roger Collins [mailto:rcollins@cariboo.bc.ca]  
Sent: Thursday, March 07, 2002 3:42 PM 
To: Robert Jensen 
Subject: FT.com | TotalSearch | Global Archive | Article

Bob, this is a bit old - but it contains comments from Steve Zeff and Baruch Lev; also, an attempt to contrast what might have happened under UK rules (what they don't mention is that there is another line of defense in the UK for folks bent on misfeasance - namely, much stricter libel laws than in the U.S.)

http://globalarchive.ft.com/globalarchive/article.html?id=020117001942&query=Enron+and+FASB 

Roger

Roger Collins Associate Professor UCC School of Business


Beleaguered Andersen was dealt another blow Wednesday when mortgage giant Freddie Mac dropped the Big Five firm after a 30- year audit relationship. Freddie Mac joins a long and growing list of clients that are abandoning Andersen in the aftermath of the firm's involvement in the Enron collapse. http://www.accountingweb.com/item/74260 


A Message from Lisa Young on March 4, 2002

A message from Ernst & Young to members of the Accounting Faculty:

Since our last communication regarding events in the profession, we have received a great deal of interesting and useful feedback from you. Thank you. Some of you asked what we were saying to clients about these same issues.

Click here http://ey.com/maintaintrust/   to view a piece designed to facilitate communications with clients and others which repeats our Chairman, Jim Turley's, Op Ed piece from the Wall Street Journal - further articulating the Ernst & Young position on many of these issues. It also addresses our focus on high-quality audits - a focus that is supported by our culture and quality control safeguards. We hope that you find this of interest.

Again, thank you for all of your comments. I hope to continue our dialogue.

Best wishes,

Lisa P. Young 
Americas Director of Recruiting Office:
(212) 773-8024 Fax:   (212) 773-5176

Reply from Stephen A. Zeff [sazeff@rice.edu

Dear Ms. Young:

I received the e-mail conveying your firm's electronic booklet, "Maintaining Your Trust," with information and views about the steps that your firm has taken and is taking in regard to the conduct of the independent audit. I have read the booklet, including Jim Turley's column in The Wall Street Journal (which I read in the WSJ). This is one faculty member's response.

I hope that one consequence of the Enron affair is a reaffirmation by the Big Five firms that they belong to a profession, and not to an industry or a business. These latter two terms have been used in profusion by Big Six/Five firm partners in the last 10 to 20 years when speaking to the press and in other utterances. Such terminology would have been peremptorily rejected as unseemly by the Big Eight firms in the 1960s and 1970s.

I hope also that your firm and the other four will no longer dissociate yourselves from "auditing" in the firm stationery. In the last 15 or so years, all of the Big Six/Five firms have vaunted themselves as "professional services organizations," essentially multifaceted consultants who seem ready to perform any service anywhere for anyone, as if auditing, or providing assurance, were no longer the raison d'etre of their existence. The Big Five firms have given auditing or assurance-giving short shrift for at least a decade in their marketing. Now, as a result of Enron, there is a rush to assure the public that it can trust the firms as independent auditors. I am glad to see it, and I hope this affirmation is not limited to the wake of Enron.

Look at your firm's Web site. Nine stories are highlighted on the front page, and only one--JIm Turley's op-ed column--has anything to do with the independent audit function. If one clicks "Services" and then "Assurance & Advisory," the reader is confronted with a page that mostly markets the firm's advisory business services, with only one of 10 sections devoted to "Assurance." And nowhere in the section on Assurance does one find the terms "independence," "objectivity," or "integrity," which the firm now promotes so heavily (as it should). Half of the 13 lines of type in the section headed "Assurance" actually deals with the independent audit, while the other half assures prospective clients that "we are able to bring you insights that can help improve your business"--that is, more selling of advisory services. As far as I can determine, there are only 6-1/2 lines (just over 50 words) on the independent audit in the entire Web site! When one clicks the hyperlink, "About E&Y," the usual characterization is found: "Ernst & Young, one of the world's leading professional services organizations, helps companies across the globe to identify and capitalize on business opportunities." When the word "audit" appears in the next paragraph, it is hyperlinked to the aforementioned section on Assurance, with its 50+ words on the independent audit.

I think you have a serious problem in public accounting, and it is not concerned with consulting services. It is that an audit partner in charge of an engagement does not want to be stigmatized for having lost a client, let alone a large client. No one discusses this issue publicly, but partners and retired partners to whom I have talked confess it privately. Somehow the firms must instill in all partners the counterintuitive value that letting a client go is a respectable action, if the firm cannot abide the client's accounting and operating policies and practices. This happens for small, highly risky enterprise, but not for the established clients.

On one specific matter, I take the view as well that companies should not be outsourcing the internal audit function even to firms that are not the company's independent auditor. One of the hallmarks of internal audit is the staff's knowledge and understanding of the company culture, and this knowledge and understanding can hardly be acquired when the internal audit function is being performed externally.

About 11 years ago, the Big Five firms were privately supporting a confidential AICPA policy statement on "appearance of independence" that would have made "appearance" applicable only to readers who were virtually trained as auditors themselves and who also were aware of the conditions in which the company finds itself. This proposed policy would, in effect, have done away with "appearance of independence" altogether. I am pleased that we have gone well beyond those forgettable days.

I am pleased that your firm is speaking out on important subjects of the day, even if you have been under enormous pressure to do so by Congress and the media. If your firm genuinely believes that it belongs to a profession, indeed the accounting and auditing profession, it needs to position itself within the profession and not at the periphery. There was a time, probably before most of today's partners became CPAs, when leading audit partners in each Big Eight firm spoke out publicly and often on controversial accounting and auditing issues, thus enriching these dialogues for the benefit of practitioners, policy makers, academics and students. Examples in E&E/E&W were Richard T. Baker, Robert K. Mautz and Dennis R. Beresford. Examples in AY were Thomas G. Higgins, Frank T. Weston and Thomas D. Flynn. Prior to the 1980s, all of the Big Eight firms had audit partners who regularly gave speeches and wrote articles on the important accounting and auditing issues of the day. But no more. All of the firms today "hide behind" the FASB, and they have abdicated their leadership roles in advancing the dialogue and debate on technical subjects of importance to the profession. I, for one, would like to see a rededication by the Big Five firms to the values of belonging to a profession.

Stephen Zeff.

Stephen A. Zeff 
Herbert S. Autrey Professor of Accounting 
Jesse H. Jones Graduate School of Administration 
Rice University 
6100 Main Street Houston, TX 77005 
tel: (713) 348 6066 fax: 713-348 5251


March 7, 2002 message from Doug Ziegenfuss, Old Dominion Universit [dziegenf@ODU.EDU

Anyone see the piece last night on the Baptist Foundation and you guessed it Arthur Andersen? Total disgrace. A wistle blower or two warned them. The Foundation's scheme was similar to Enron's scheme. They haven't posted it to the CBS website yet. The lawyer for Andersen was extremely weak in the face of the retirees who lost everything.

Douglas E. Ziegenfuss 
Professor and Chair, Department of Accounting 
Room 2045 Hughes Hall 
Old Dominion University Norfolk, Virginia 23529-0229

Reply from Richard J. Campbell [campbell@RIO.EDU

Doug: And amazingly enough, a single sole practitioner-CPA in Phoenix discovered the probability of fraud, notified Andersen and was ignored.

Richard J. Campbell www.VirtualPublishing.NET  
mailto:campbell@VirtualPublishing.NET 

 


From The Wall Street Journal Accounting Educators' Review on March 7, 2002

TITLE: Enron Fuels Accounting Debate in EU; Yet Changes are Coming Via Domestic Efforts Already Under Way
REPORTER: Silvia Ascarelli and Paul Hofheinz
DATE: Mar 01, 2002
PAGE: A7
LINK: http://online.wsj.com/article/0,,SB1014843242606331720.djm,00.html 
TOPICS: Auditing, Financial Accounting, International Accounting

SUMMARY: The article discusses changes proposed by various domestic European accounting and auditing regulatory bodies and the European Commission.

QUESTIONS:

1.) What is the European Commission?  Are international accounting standards (IASs) in use currently in Europe in general?  In specific European countries?  How are accounting standards established in Europe in general?  In specific European countries?

2.) Give examples of at least two changes proposed in different European countries.  Describe how each of the proposed changes could help to improve the practice of accounting and auditing.  Compare those changes to current U.S. practice in that area.

3.) How has Enron's use of special-purpose entities, and the company's resulting surprise collapse, fueled the argument in favor of firms that are traded on U.S. exchanges being allowed to report under IASs?  Why has the SEC resisted allowing this practice?  (Hint:  for a speech addressing this topic, visit the SEC's web site at the following link: 

http://www.sec.gov/news/speech/spch454j.htm 

Reviewed By: Judy Beckman, University of Rhode Island
Reviewed By: Benson Wier, Virginia Commonwealth University
Reviewed By: Kimberly Dunn, Florida Atlantic University


Putting a Bloodhound on Enron's Trail The Justice Dept.'s Leslie Caldwell -- known as a canny criminal prosecutor -- is now probing possible charges at the energy giant
http://www.businessweek.com/bwdaily/dnflash/mar2002/nf2002037_8195.htm?c=bwinsidermar08&n=link4&t=email 


March 8, 2002 Message from the Risk Waters Group [RiskWaters@lb.bcentral.com

This week, the US Senate started to debate whether to introduce an energy bill that could give the Commodity Futures Trading Commission (CFTC) authority on over-the-counter energy derivatives. While some Senators, led by Californian Democrat Senator Dianne Feinstein, are pressing to pass the legislation, James Newsome, CFTC chairman, said he is wary of introducing reforms as a knee-jerk reaction to Enron’s demise.

The International Swaps and Derivatives Association has already voiced its concern about the proposed legislation in a letter to the US Senate leaders Tom Daschle and Trent Lott. “Adopting significant changes to legislation affecting the financial services industry is premature, given the lack of hearings and analysis by committees with jurisdiction...New regulations should not be imposed without a clear finding that OTC energy derivatives contributed to the Enron collapse or the California energy crisis,” said the letter.

Meanwhile, leaders of the US House Energy and Commerce Committee called on 10 investment banks and three credit-rating agencies to turn over records linked to Enron. On a more optimistic note, Alan Greenspan, chairman of the US Federal Reserve, this week said financial derivatives, asset-backed securities and collateralised loan obligations, among other new financial products, have enabled more effective risk dispersion, making economic shocks less likely to result in "cascading business failure”.

In European news, the London International Financial Futures and Options Exchange said it will list a further 22 European universal stock futures from April 18 2002. From that date, a total of 118 universal stock futures will be available on blue-chip stocks from 12 European countries, listed in five currencies across 12 exchanges, with an underlying market capitalisation of €7.69 trillion. Liffe said it increased its line-up due to requests from traders in European hedge funds and equity funds.

On the people front, Piero Overmars has stepped up from his role as ABN Amro’s head of global financial markets in Japan, to become the Dutch bank’s global head of global financial markets, based in Amsterdam. He replaces Nils Lorenzen, who has resigned for personal reasons. Lorenzen will, however, stay at ABN, and a spokesman said his new role will be announced shortly.

Christopher Jeffery Editor, 
RiskNews 

http://www.risknews.net
  
mailto:cjeffery@riskwaters.com
 


The Case for Halting the Auditors' Revolving Door
Law-makers and businesses are taking steps to halt the "revolving door" between auditors and their clients. A majority, 58%, favor imposing a two- to five-year waiting period during which auditors may not accept senior positions with audit clients. http://www.accountingweb.com/item/73865 


Hi Lou,

I am headed out the door for Denver so I do not have time at the moment to probe this issue. On surface, however, it appears that this propsed law only applies to the deregulation of energy derivatives that made it possible to trade such derivatives in trading houses like Enron. It has nothing to do with FAS 133 accounting other than making such derivatives feasible. Being loyal to her California constuency, Senator Feinstein does not want energy markets to be unregulated (which is necessary for futures trading).

Bob -----Original Message----- From: Lleguyad@aol.com [mailto:Lleguyad@aol.com] Sent: Monday, March 11, 2002 11:01 AM To: rjensen@trinity.edu Subject: Clearing up Confusion on United States Laws Impacting Accounting for Derivatives

We exchanged emails recently concerning my reading about a law that seems to exempt derivatives from certain types of regulation, including accounting rules.

I shall pass on to you the most recent journalistic reference to this so we can understand what this is about.

Please refer to the Eastern Edition of the Wall Street Journal for today, March 11, 2002, page A8, the article "CFTC Probes Enron Commodities Trading"

"Sen. Dianne Feinstein (D., Calif.) has offered a bill that would roll back provisions of the Commodities Futures Modernization Act of 2000 that exempted energy derivatives and off-exchange derivatives contracts from CFTC's oversight."

It is reference to this law that caught my attention earlier and prompted my first email to you on this topic. The article goes on

"Critics of the Feinstein bill believe it could have unintended consequences that would affect the legal certainty of futures contracts."

It would be very helpful if your website addressed this law and the debate around it.

All the best,

Lou

Louis P. Le Guyader 
Le Guyader & Co., Ltd.

March 13 reply from Louis Le Guyader

hi Bob

I would encourage all of us to continue watching this.

That Act contains some very interesting passages that impact the type of market, and so the fair value and thereby the accounting, for many types of derivative contracts -- not just energy. The Act invites characterization of derivatives markets that can sometimes impact how, or even whether, a derivative contract is governed by a set of accounting rules.

You could create space on your website for specialists in energy trading accounting to explore the rules that govern energy contracts where FAS133 does not apply.

Looking forward to more postings on your website.

Lou


Message from Roger Collins to Steve Zeff

Dear Professor Zeff,

Having read your letters to Bob Jensen ( http://www.trinity.edu/rjensen/booknew.htm  of January 1st 2002), you may be interested (amused?) to note that this afternoon I opened my course on Accounting Theory with the following quote

"Those who cannot remember the past are condemned to repeat it" ( which I believe is attributable to Santayana).

Apropos your comments re the lack of history in Accounting programs; it is my loss that when considering a PhD course in the U.S. in 1984 I was unable to interest Case Western, and instead opted for Ohio State, where Tom Burns offered a (more or less) living wage and ran an impressive program in terms of technical grounding for a certain style of research. Unfortunately, it transpired that the program was completely antithetical to both my inclinations and abilities (which is why I am writing this from Canada)*.

I am interested in your proposal that accounting is not a profession; from a sociology course I took in 1969 I recall that one of the major (perhaps the most major) concerns of groups calling themselves professions was the regulation of the activity of their members insofar as the charging of fees was concerned. To my lecturer at least, it appeared that income protection and advancement was the primary purpose of most professional bodies...Of course, sociologists may be examining the concept of professionalism through jaundiced lenses. For myself, I have found many sociologists to be "annoying but useful" - in the sense that they make me think twice about ideas that I might be a little too uncritical in accepting. Sometimes it pays to have a "turbulent priest" around the place...Incidentally, a sociologist at Berkeley (sorry, I'm writing this from my "home office" and so his name is not to hand) has published some very intriguing research on "survival statistics" of newspaper titles that might, if the data is available, be interesting to follow up with respect to survival statistics for public accounting firms.

One thought which came to mind re your comments; given that in 1987 you were doubtful about the status of accounting as a profession - how do the other groups which label themselves professions match up to your standards? Is accounting the only group which does not pass muster, or are there others equally open to criticism? Has there been a decline in standards from some past level - and has it been selective or is it a general decline across professions as a whole?

In addition to your comments, I have also read Joel Demski's Presidential address of August 22nd. My own thread to Bob's list is appended as an aide-memoire. It may also be worth noting that in a separate thread to the discussion group I speculated that the only event which would reduce the incidence of auditing and associated financial scandals would be a potentially firm-breaking damages award against one of the "Big 5", and that the "market forces" which would establish de facto accounting standards would be legal judgements.

It may be that your two sets of comments have adequately covered the area into which I am about to venture, but none the less I would appreciate your comments on the following.

Numbers of commentators - academic, professional and otherwise - appear to be drawing from Enron and other events the conclusion that the profession is in crisis. Chatov (see below) has suggested that it is not simply the profession but the regulatory system which is in crisis, and attributes at least part of this crisis to a lack of nerve on the part of accounting academics and their acquiescence in a "lesser role" in the regulatory process. On reading Chatov I was reminded of David Solomons'** comments re certain fragments of the Conceptual Framework project (paper 5?) which he termed "a cop-out" - a cop-out because (I suspect) the panel knew full well that while the profession did not have the advantage in terms of logic "it had the men, it had the guns, and had the money too".

These events have lead me to wonder whether there might be an appetite within the AAA for some form of address at the Annual Meeting which would encourage academics to think more deeply about the situation.This would go beyond the Demski address to tackle head-on;

a). the issue of the involvement of academics in the regulatory process b). the independence and objectivity of the current process as a consequence of its current structure and history/development. c). Political considerations and their impact on the independence and objectivity of the current process (especially interesting in the light of this week's SEC appointments). d). Faustian bargains - should academics be part of the process or should they withdraw from it in order to change it ? e). Preparedness - is current accounting research - interms of both its output and its direction - relevant /useful to the regulatory process ? f). A new "relevance lost" - will accountants concede the regulatory battleground to lawyers?

On second thoughts, perhaps "appetite" is a little too strong - but I would be interested to have your comments - is the suggestion for such an address premature, misdirected, irrelevant - or, in some sense, useful?

Sincerely,

Roger Collins Associate Professor UCC School of Business

* No, I did not complete a PhD program. However, the move was responsible for the best decision I have made in the course of my life; within a week of arriving in Canada I had met my future wife.

**Although I was never formally taught by David Solomons I did work for him in a very minor capacity while he produced "Prospectus for a Profession" for the various professions in the UK.He was the most impressive combination of academic and gentleman that I have ever had the privilege to meet.

Fragment from Bob Jensen's Threads regarding Enron

Reply from Roger Collins [rcollins@CARIBOO.BC.CA

I came across the following interesting historical perspective to the current debacle; check out "Corporate Financial Reporting" by Robert Chatov. Chatov is a lawyer who did a PhD at Berkeley in the 70's. The book appears to be his PhD thesis - ISBN 0-02-905410-9. Mostly, its a critique of the way he thinks the SEC let the side down by devolving power to set standards to the profession in the 30's, 40's and 50's - but its got some facinating stuff in it. For example, the following quote:

"Accountancy has thus far accumulated little technique, for it is still in the process of steady development of fundamental principles....developed as a composite of the best and most enlightened business experience"

Source? Arthur Anderson - THE Arthur Anderson.* It seems as if this little bit of philosophy has had a long lasting influence on the way that AA go about their business.

Chatov comments; "Anderson's was a typical "business precedent" orintation that assured a constant flux in accounting practice, because accounting practices would change according to corporate interests. By that standard, of course, accounting "principles" were potentially infinite".

But wait - there's more...

"In the 1970 case of United States v Simon a certain Attorney A.A. Sommer, prior to his SEC appointment offered an evaluation of what had happened:

More disturbing to the accounting profession than the conviction itself was the language in which Judge Henry J. Friendly, surely one of the most knowledgeable judges in financial and accounting matters, wrapped the affirmance. He said in effect that the first law for accountants was not compliance with generally accepted accounting principles, but rather full and fair disclosure,fair presentation, and if the principles did not produce this brand of disclosure, accountants could not hide behind the principles but had to go beyond them and make whatever additional disclosures were necessary for full disclosure.In a word, "disclosure" was a concept separate from "generally accepted accounting principles" and the latter did not necessarily result in the former ( Sommer, 1970 in "The Business Lawyer 26 - November 207-214)."

This has some interesting implications for, among other things, the European community's Fourth Directive and associated legislation, and appears to justify the UK profession's battle for "fairness" as a provision within European accounting principles.

Another quote - direct from Chatov - which may cause fluttering in a few dovecotes...

"Another serious gap in accountant professionalism is the failure of academic accountants to gain sufficient operational influence within their field. For one thing, they have been too deferential.......The effects of accounting research as published in The Accounting Review had little effect on APB opinions.......The accounting scholar's higher authority exists mostly in the form of the administrative authority present within the SEC. But the commission lacks the independence of the courts because of its political vulnerability and the limitations inherent in combining the functions of accuser and judge.Under the circumstances academic accountants, who for the most part are outside of the practitioner-client-SEC system, must play a less significant role, unless specifically assigned one legislatively.

The academics, however, have more or less acquiesced in this lesser role.....They have permitted themselves to be used by the accounting practitioners and by the financial community by holding secondary or token positions on the APB and the FASB, knowing that the real decisions would be dictated by either the AICPA or the FEI......to the extent that promotions are contingent on the publication of abstract, mathematically based papers, there will be less likelihood of academic participation in the public policy oriented issues concerned with the determination of corporate financial reporting standards"

...I think I've made someone's weekend here....

There are lots of other quotes in this volume, most of which point to the aphorism

"Those who do not know history are condemned to repeat it"

For instance, how many on the list know of Paton's criticism of the AIA's "Statement on Accounting Principles"? Of the battles accompanying the present American Accounting Association's change of name from AAUIA to AAA? Of the struggles surrounding the foundation of the SEC ? Chatov discusses all of this and more.Ironically, there appear to be many lessons just waiting to be learned from the past. I'm not sure I agree with Chatov's conclusions, most of which suggest that it is the SEC which needs to get a grip on the situation by taking regulation into its own hands, but he certainly raises many interesting points for debate.

It might also be interesting to consider what use technology might be in resolving this issue - in particular, the opportunities for users of accounting information to obtain direct access to material held on internal corporate databases, and the kind of behaviour which that kind of activity that might provoke in terms of corporate response.

Roger

Roger Collins 
Associate Professor 
UCC School of Business, Kamloops, CANADA

*From "Present-Day Problems Affecting the Presentation and Interpretation of Financial Statements" - JA 60 November 1935 330-334.


March 14, 2002 message from Dennis Beresford [dberesfo@terry.uga.edu

Bob,

The Financial Accounting Foundation proposed today to reduce the size of the FASB from 7 to 5 members in order to speed up the process. The press release describing this is on the Board's web site - www.fasb.org .

Denny

The news release is at http://www.fasb.org/news/nr031402.html 

After a review of recent events, the Trustees determined that there is a need for the FASB to be more flexible in responding to change and to increase the efficiency of its standard-setting process. By doing so, financial reporting standards would be enhanced.

The Trustees considered the need for accelerating the standard-setting process by improving the FASB’s efficiency without compromising the quality of its open due process. To meet that objective, the Trustees approved a proposal for public comment that includes the following:

The Trustees will carefully consider responses to the proposal before deciding on a course of action. If approved, the proposed reduction in the size of the FASB would transition over time and be achieved through attrition. Comments also will be sought on the composition of a five-member board. The current board is composed of three members from public accounting, two from industry or the preparer community, another from the investor or user community and one from the academic community.

In reflecting on the action under consideration by the FAF to enhance the FASB’s process, Mr. Johnson remarked, "We have a responsibility to investors and we take it very seriously. The Trustees are committed to preserving the independence of private-sector standard setting and will continue to consider improvements to the process in as timely a manner as possible."

Independence

At its March 4 meeting, the Trustees also reviewed the importance of having an independent accounting standard setter. Much of that review centered on a position paper entitled "The FASB’s Role in Serving the Public, A Response to the Enron Collapse" that was prepared by FASB Chairman Edmund L. Jenkins. The paper, covering a broad range of issues, emphasizes the necessity of having an independent, private-sector accounting standard setter in maintaining efficient capital markets and is available on the FASB’s website at www.fasb.org .

Despite significant resistance from some of those affected, the FASB has made substantial improvements to financial reporting that have resulted in greater transparency of financial information. The following are a few examples drawn from the Jenkins paper:

Requiring that reporting entities recognize liabilities for retirement benefits when those entities promise them to employees rather than when they later pay them.

In commenting on current auditor reform proposals, Mr. Johnson stated, "While the Trustees are interested, concerned and highly supportive of efforts to improve the independence and effectiveness of the auditing system, the FASB has no authority or responsibility for auditing matters. And as part of the broader financial reporting system, we believe it is critical that the FASB remain an independent, private-sector organization—free from political pressure. Independence is critical to developing credible and transparent information for investors and is essential to the vibrancy of the U.S. capital markets."

Vital to the independence of a private-sector standard setter is broad-based funding support from constituents in order to avoid undue influence from any single source. In commenting on this issue, Mr. Johnson said, "Now more than ever, all of our constituents—and especially the investor community—should view this as an important opportunity to support high-quality financial reporting standards, and we strongly encourage broad participation in the contribution process." Approximately two-thirds of the FASB’s funding comes from the sale of publications and licensing agreements. The remaining one-third is from a broad base of contributors, including the public accounting profession, and the corporate, investor and academic communities.

Comment Period

A document seeking public comments on the proposed changes will be issued on or about March 18, 2002, and will also be available on the FASB’s website at www.fasb.org . The comment period will be 30 days and all responses received in that time frame will be considered by the Trustees at their next regular meeting scheduled for April 23, 2002.


On March 14, Roger Collins made me aware of the following Times Online article --- http://www.thetimes.co.uk/article/0,,2-236910,00.html 

Andersen's UK office shredded Enron papers

ANDERSEN accountants in London colluded with their colleagues in Houston to destroy important financial documents related to the Enron scandal, according to criminal charges made against the firm in America last night.

The eight-page Justice Department indictment, which has been likened to a “death sentence” for Andersen, asserts for the first time that some of the accounting firm’s London employees destroyed documents


THE RELUCTANT REFORMER 

SEC Chairman Harvey Pitt now has the Herculean task of cleaning up a financial mess that has been getting worse for years. Will Pitt, a savvy conservative who's wary of regulation, crack down on corporate abuses?

Available to all readers: http://www.businessweek.com/premium/content/02_12/b3775001.htm?c=bwinsidermar15&n=link60&t=email 

Available to all readers (Monday, March 18, 2002): http://www.businessweek.com/magazine/content/02_12/b3775001.htm?c=bwinsidermar15&n=link60&t=emai 

Few SEC chiefs have come into office with the qualifications Pitt brings. He knows both the agency and the industries it regulates intimately. In a quarter-century of representing financial-fraud defendants he has been exposed to nearly every known form of chicanery. The Reluctant Reformer has enormous potential to end the epidemic of financial abuse plaguing Corporate America. And when it comes to getting things done, there's a chance that Pitt's conciliatory style could achieve much more than Levitt's saber-rattling.

Will this historic moment in American business produce a historic reformer? Or will Pitt succumb to the pressures--from his party, from Wall Street, and from his own ideology--and devote himself to little more than calming the troubled political waters around his President? Super-lawyer Pitt likes to say that since he took the helm at the SEC, he now works for "the most wonderful client of all--the American investor." It's time for him to deliver for that client as he has for so many others before.


From Phil Livingston, CEO of the Financial Executives International on March 20, 2002

FEI Publishes Reform Recommendations Last week the FEI Executive Committee approved a set of recommendations for consideration by Congress, the regulators and all corporate executives. The proposals cover a broad area and are intended to strengthen our financial reporting and governance systems. The 12 recommendations were developed by a member task force, and the task force also had significant input from FEI’s Committee on Corporate Reporting.

We offer recommendations in four areas: · Strengthening financial management and commitment to ethical conduct · Rebuilding confidence in financial reporting, the accounting industry and the effectiveness of the audit process · Modernizing financial reporting, and reforming the accounting standards-setting process · Improving corporate governance and the effectiveness of audit committees

Download a copy of the recommendations at: http://www.fei.org/download/taskforce.pdf  (This file is in Adobe Acrobat format. To download the free Adobe Acrobat reader, click here: http://www.adobe.com/products/acrobat/readstep2.html  )

FEI Publishes Revised Code of Ethics After receiving more than 200 comments from members, FEI is republishing its Code of Ethics. Thanks to the great work by the Ethics & Eligibility Committee, chaired by Rich Schrader, CFO of Parsons Brinckerhoff. The revised code now calls for all financial executives to acknowledge their affirmative duty to proactively promote ethical conduct in their organizations. View the revised code at: http://www.fei.org/info/code.cfm 

 



And that's the way it was on March 25, 2002 with a little help from my friends.

 

Bob Jensen's main document on the Enron scandal and other accounting frauds is at http://www.trinity.edu/rjensen/fraud.htm 

 

In March 2000, Forbes named AccountantsWorld.com as the Best Website on the Web --- http://accountantsworld.com/.
Some top accountancy links --- http://accountantsworld.com/category.asp?id=Accounting

 

For accounting news, I prefer AccountingWeb at http://www.accountingweb.com/ 

 

Another leading accounting site is AccountingEducation.com at http://www.accountingeducation.com/ 

 

Paul Pacter maintains the best international accounting standards and news Website at http://www.iasplus.com/

How stuff works --- http://www.howstuffworks.com/ 

 

Bob Jensen's video helpers for MS Excel, MS Access, and other helper videos are at http://www.cs.trinity.edu/~rjensen/video/ 
Accompanying documentation can be found at http://www.trinity.edu/rjensen/default1.htm and http://www.trinity.edu/rjensen/HelpersVideos.htm 

 

Professor Robert E. Jensen (Bob) http://www.trinity.edu/rjensen
Jesse H. Jones Distinguished Professor of Business Administration
Trinity University, San Antonio, TX 78212-7200
Voice: 210-999-7347 Fax: 210-999-8134  Email:  rjensen@trinity.edu