Quote:
Originally posted by KSig RC
This is a misnomer, in that little in the way of convincing evidence was presented to show that AA violated GAAP in its actual accounting - however, much evidence was shown that Enron's in-house abused these principles to misrepresent to shareholders. The document shredding charges brought them down, in many ways, and unfortunately "it's fishy" is weak.
You may very well harbor ill will toward AA, but in looking at the history of similar cases, the firm received starkly different treatment than many other auditing and accounting firms (as have other recent cases) - that's generally not "justice being served", more like "public paranoia".
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This is true, my bad. But what I was getting at is that if nothing else, AA serves as an example of what can and should happen if you go against GAAP, and ethics pretty much by default, when you help someone violate those principles.
AA was about 90 years old when it lost its license. That means it was around when the SEC was founded in 1933, then CAP, APB, and FASB in their respective years of founding/replacing the previous. You'd think that firms that had been around that long would have known what to expect if they helped someone deceive the general public through manipulating financial information.
Even if it was Enron's in-house accountants that were screwing with numbers, they should have been familiar with GAAP* and known the potential poostorm they were getting into violating them, and AA as a supposedly "neutral outside auditor" should have known that too.
It still appears, however, that AA knew that what Enron was doing was wrong and did nothing to stop it even though numerous potential investors/actual investors/employees with stock options were being decieved. This is one of those cases where failing to stop the wrong being done is just as bad as causing it.
*After all, generally accepted accounting principles is a concept you should be at least acquainted with as a business major (pretty much no matter the field), since virtually everyone in a business major has to take at least basic/intro accounting courses.