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Timothy J. Fogarty
Case Western Reserve University

For Public Interest Section members and fellow travelers, the irony of the events that have come to be known as Enron et al. is that we could engage in various forms of "I told you so" thinking. Just for once there was vindication for long-held beliefs that went along the lines that independence was important, that money was too powerful a force, and that there was deficient ethics in the profession. I'm not sure that taking credit for "predicting" the cataclysm was believable or even that it was satisfying. I am more sure that it is all over now in the sense that we are back to where we began.

First the homage to recent history. In the midst of Andersen's death throes, do you remember Paul Volher's stillborn notion of a new model for public accounting practice — one dedicated to the public interest, rigorous accounting and ethicality? Do you also remember the frantic posturing by the AICPA to reclaim the mantle of old-fashioned professionalism? We don't even want to make mention of all the political capital that was harvested by all the politicians that rode into town on the Sarbanes-Oxley horse of corporate accountability.

For all of its sins, Andersen deserved punishment. However, in part it died for the transgressions of all. Its burial provided permission to psychologically close the book on the contribution of the accounting profession to the madness of the millennium. Keep your eyes open for the revisionism of the "lone gunman" theories for whom we have that corpse to thank. We will also enjoy the show trials of Andy Fastow, Ken Lay and a few others in that spirit.

I would not say that "the high road" has been closed; it's just that nobody in accounting is taking it much these days. No meaningful structural change has come out of the AICPA. This organization is distancing itself from its high minded promises of reform as fast as it dropped the cognitor project down the memory hole. Once a trade association, always a trade association.

The large public accounting firms made fewer promises in the wake of these debacles, and they are living up to them. Various versions of "it could not have happened to us" were so often repeated that somebody at these firms might have talked themselves into believing them. The scope of service boundaries have been redrawn but only so that control over clients is less certain. In anything, the preservation of revenue levels in the face of fiercer competition will not be an environment predisposed toward doing the right thing.

Sarbanes-Oxley, if not on the run, is on the ropes. Whether you believe its initial sincerity or not, you will have to witness its progressive hallowing out by multitudes of well-intentioned people that cannot distinguish between form and substance. The PCAOB talks a good game, but has yet to demonstrate that they have the guts to use their powers.

Perhaps the leadership of the American Accounting Association got this one right. By treating Enron et al. as events that never happened, it is less difficult to resume. Everyone else is at least doing somersaults.

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