All this week the Chicago Tribune has been running a special in-depth series about the Enron/Anderson debacle.
September 4, 2002 10:48 PM Subscribe
All this week the Chicago Tribune has been running a special in-depth series about the Enron/Anderson debacle. There's lots of interesting reading here, most of which leaves one shocked at seeing how some American businesses are run. A good starter is Ties to Enron Blinded Anderson, which shows how the greed of both companies mixed with the old boy's club mantra of 'scratch my back and I'll scratch yours' led to collusion and fraud on level never before known in modern business. Reg: cpunks/cpunks
This post was deleted for the following reason: Poster's Request -- frimble
(i had a job offer with them after finishing school; alas due to enron, I never started)
posted by reverendX at 11:08 PM on September 4, 2002
posted by reverendX at 11:08 PM on September 4, 2002
Andersen's shit stinks. But, I'd be willing to bet some five to six years after the Bush Clan's roots have withered we'll find all out about Andersen's fall guy role in saving the face of the current administration and the CEO's who matter most in directing the transformation of this country.
Did I write country? World, I meant.
(on preview)
It's hard to take someone seriously who can't spell the firm's name.
Good Lord chief. Anderson is the most common way of spelling the "Anderson" family designation in America. Hardly a reason for anything, but to make yourself feel necessary.
posted by crasspastor at 11:12 PM on September 4, 2002
Did I write country? World, I meant.
(on preview)
It's hard to take someone seriously who can't spell the firm's name.
Good Lord chief. Anderson is the most common way of spelling the "Anderson" family designation in America. Hardly a reason for anything, but to make yourself feel necessary.
posted by crasspastor at 11:12 PM on September 4, 2002
Speaking of names, who remembers what Accenture used to be called? I bet someone is feeling pretty damn vindicated these days.
posted by jaek at 11:13 PM on September 4, 2002
posted by jaek at 11:13 PM on September 4, 2002
I'm sorry for that outburst. Apologies revX.
But that's ridiculous to call out an argument of obvious substance with a semantic quibble.
posted by crasspastor at 11:16 PM on September 4, 2002
But that's ridiculous to call out an argument of obvious substance with a semantic quibble.
posted by crasspastor at 11:16 PM on September 4, 2002
The entirety of the first paragraph on Accenture's History page:
Accenture traces its roots back to 1953 with the installation of the first computer for business application at General Electric. In 1989 our company was established as a separate and independent business unit devoted solely to management and technology services. In 2001 we changed our name to Accenture.
Imagine that, operating without a name for 12 years.
posted by jeffj at 1:30 AM on September 5, 2002
Accenture traces its roots back to 1953 with the installation of the first computer for business application at General Electric. In 1989 our company was established as a separate and independent business unit devoted solely to management and technology services. In 2001 we changed our name to Accenture.
Imagine that, operating without a name for 12 years.
posted by jeffj at 1:30 AM on September 5, 2002
Perhaps the handiest site for info on Enrondersen is Enron's home town paper, the Houston Chronicle. As the primary print news source for a huge chunk of Enron's employee and investor base, they took very seriously the responsibility of breaking this story in great detail, and have it all archived online in reasonably accessible form.
You know, skallas, while I'm mostly with you on the inanity of spelling flames, I have to admit that there is room for criticism when the word in question is the one most likely to be used as a search term. But then again, that wasn't mentioned in the flame.
posted by Nicolae Carpathia at 1:52 AM on September 5, 2002
You know, skallas, while I'm mostly with you on the inanity of spelling flames, I have to admit that there is room for criticism when the word in question is the one most likely to be used as a search term. But then again, that wasn't mentioned in the flame.
posted by Nicolae Carpathia at 1:52 AM on September 5, 2002
(glad somebody posted this - was going to this morning - great series and the trashing of the reputation of Andersen is just astounding. I hadn't known they were the high priests of accounting - and now they're an embarrassment. Again: Wow.)
posted by ao4047 at 4:59 AM on September 5, 2002
posted by ao4047 at 4:59 AM on September 5, 2002
Skallas this is a very interesting set of articles which I'd have otherwise missed - thank you for posting.
There's a raft of issues raised here that I find infuriating. I can't believe that the Justice Department was ignorant of the larger consequences of its actions in indicting the firm. Although I can see the pour encourager les autres justification, the upshot of the JD's actions are even less competition amongst the remaining Fat Four. For all of Andersen's undeniable sins, to finance directors, Andersen's offer of 'creative audit' was a compelling one and encouraged competition in that particular marketplace. Shame that some partner's teams couldn't implement this offering in a legal way.
Besides, the furore round Andersen is just a diversion from the larger issue - the need for the US to reform its Generally Accepted Accounting Practises. Ruled-based systems encourage a 'if it's not banned then it's legit' approach. And the CEOs’ declaration on accounts? Tokenism and worded so as to legally worthless, I'm told. Volcker's time would be better spent encouraging the US to adopt IASB standards based on principle-based regulation.
Just my tuppenceworth...
posted by dmt at 5:23 AM on September 5, 2002
There's a raft of issues raised here that I find infuriating. I can't believe that the Justice Department was ignorant of the larger consequences of its actions in indicting the firm. Although I can see the pour encourager les autres justification, the upshot of the JD's actions are even less competition amongst the remaining Fat Four. For all of Andersen's undeniable sins, to finance directors, Andersen's offer of 'creative audit' was a compelling one and encouraged competition in that particular marketplace. Shame that some partner's teams couldn't implement this offering in a legal way.
Besides, the furore round Andersen is just a diversion from the larger issue - the need for the US to reform its Generally Accepted Accounting Practises. Ruled-based systems encourage a 'if it's not banned then it's legit' approach. And the CEOs’ declaration on accounts? Tokenism and worded so as to legally worthless, I'm told. Volcker's time would be better spent encouraging the US to adopt IASB standards based on principle-based regulation.
Just my tuppenceworth...
posted by dmt at 5:23 AM on September 5, 2002
You may have had a lucky escape reverendX. Andersen became very good at recruiting bright ambitious people from University. They made lots of glamorous promises. They then put these people in an endless series of accounting offices, auditing the work of clerks. This is the dullest and most soul destroying work you can imagine. These clever people were well paid but chronically underemployed - and from this, I suspect, comes all of the trouble.
In the UK (which was a big part of Andersen) all the trends that the Trib article locates in the 90s were clearly visible in the early 80s. deLorean was notorious in Surrey Street as a disaster zone long before it became public. The pressure to serve business managers, most of whom were alumni, to cut time and cost on audits by 'question spotting' just as we had learned to pass exams with the minimum work. The biggest problem though was that this work was being carried out by people with no regard for accounting, it was just a route to something else.
posted by grahamwell at 5:27 AM on September 5, 2002
In the UK (which was a big part of Andersen) all the trends that the Trib article locates in the 90s were clearly visible in the early 80s. deLorean was notorious in Surrey Street as a disaster zone long before it became public. The pressure to serve business managers, most of whom were alumni, to cut time and cost on audits by 'question spotting' just as we had learned to pass exams with the minimum work. The biggest problem though was that this work was being carried out by people with no regard for accounting, it was just a route to something else.
posted by grahamwell at 5:27 AM on September 5, 2002
Great series of articles. But the focus on Andersen's corporate culture reinforces the false idea that the problem was somehow due to a few bad people or a single corrupt firm. In fact, the entire system is constructed to encourage corruption.
Auditing is a corrupt business because the goverment requires that companies have their books audited. The auditors get guaranteed business. They are supposed to be representing the interests of the market in full disclosure, and the interests of the goverment in making sure companies comply with the laws. But the auditors are paid by the companies they police. Imagine if health inspectors were paid by restaurants to certify their kitchens.
Consulting is a corrupt business because consultants are paid to serve corporate management. Consultants give top managers a way to deflect accountability by transferring the responsability for difficult decisions onto outsiders, who are justified by the reputation of their consulting firm. Projects backed by the Big 5 consultancies cannot be seen as failures, since both the consultants and the managers that hire them have too much at stake. So ways must be found to continue playing the game: "that multi-million dollar project for didn't deliver results, but that's because we now need to spend another few million on this new project."
Put auditing and consulting together and you get the kind of organised crime relationship between companies and consultancies that the article describes well. Everyone does it, and the dirty secret of the industry is how lawsuits are used to correct the system. The goverment periodically hits auditors with fines and probation for overstepping the boundaries, and clients often sue consultants and wind up recovering a small part of the fees they waste on corrupt advisors. People pay up, companies change consultancy firms, and the game goes on.
The situation might get better now that the other auditors can see that certain types of games can lead to the corporate death penalty. But the system is still corrupt, and the rest of the Big 4 engage in the same practices as Andersen.
posted by fuzz at 5:46 AM on September 5, 2002
Auditing is a corrupt business because the goverment requires that companies have their books audited. The auditors get guaranteed business. They are supposed to be representing the interests of the market in full disclosure, and the interests of the goverment in making sure companies comply with the laws. But the auditors are paid by the companies they police. Imagine if health inspectors were paid by restaurants to certify their kitchens.
Consulting is a corrupt business because consultants are paid to serve corporate management. Consultants give top managers a way to deflect accountability by transferring the responsability for difficult decisions onto outsiders, who are justified by the reputation of their consulting firm. Projects backed by the Big 5 consultancies cannot be seen as failures, since both the consultants and the managers that hire them have too much at stake. So ways must be found to continue playing the game: "that multi-million dollar project for
Put auditing and consulting together and you get the kind of organised crime relationship between companies and consultancies that the article describes well. Everyone does it, and the dirty secret of the industry is how lawsuits are used to correct the system. The goverment periodically hits auditors with fines and probation for overstepping the boundaries, and clients often sue consultants and wind up recovering a small part of the fees they waste on corrupt advisors. People pay up, companies change consultancy firms, and the game goes on.
The situation might get better now that the other auditors can see that certain types of games can lead to the corporate death penalty. But the system is still corrupt, and the rest of the Big 4 engage in the same practices as Andersen.
posted by fuzz at 5:46 AM on September 5, 2002
Something of a companion piece: The Washington Post recently ran a five-part series entitled "The Fall of Enron." A great deal of information for those with the time and inclination to get into it. "Post reporters interviewed 50 insiders at the Houston energy-trading company and examined thousands of pages of trial transcripts and documents from investigations by congressional committees and a special committee of Enron Corp.'s board of directors. The board documents include summaries of interviews with 68 current and former Enron executives."
posted by Dean King at 9:38 AM on September 5, 2002
posted by Dean King at 9:38 AM on September 5, 2002
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posted by reverendX at 11:05 PM on September 4, 2002