JP,
Thanks for your observation that my words constituted a rant. They most certainly did. And purposefully so. Because we need to collectively shake ourselves into some sort of sensibility about how far the capitalist system has run off the tracks.
Re: it seems pretty obvious that fraud was the fall of Enron.
Agreed about Enron. Additionally, fraud, hubris and collusion on the part of Artful Andersen and the 'Asleep at the Wheel' Regulators, like industry's lapdog, the FERC.
Re: the public accounting profession has tried to make it clear to the investing public that the procedures used during an audit are not designed to detect fraud
Say what? I find that impossible to swallow. I've been audited, fraud was part of what my private company was examined for. How is it that Enron gets a free pass? How can a public company be audited to lower standards than a privately owned concern? That boggles my mind that you make this statement.
Re: To take a guess at where the fraud arises, imo we may see that representations regarding the limit of liability to Enron of the mass of partnerships was mis-represented.
And who was helping to structure these deals? My guess is that Andersen's consulting wing was joined at the hip with Enron's financial wizards to create these off-balance sheet illusions.
Re: . Further, regardless of the audit procedures, if a managment group are intent on fraudulently executing their stewardship function, i doubt any procedures will be successfull.
Good grief, so we are supposed to just throw up our hands and say future Enrons are unavoidable? That flies in the face of good sense. Clearly there is a huge conflict of interest in the accounting industry, attempting to both consult and audit. That abuse needs to stop. Furthermore, the efforts of the consultancies to subvert the spirit of FASB 140, the rules controlling unconsolidated partnerships, has got to be re-examined in the light of Andersen and Enron's callous chicanery. What they did may actually be legal. But it was clearly unethical in any "reasonable man" sense of the word. And in seeing what the results were for thousands of honest employees, I would say that it is immoral.
You seem to say there's nothing we can do. I vociferously disagree with you on that. There's plenty of changes that can be made. Starting with providing proper regulation of the now discredited accounting industry, some of the best fiction writers of our age.
-Ray |
