ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

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ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Alan Anderson Senior Vice President Senior Vice President

Transcript of ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Page 1: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

ENRON: Aftermath…….Lessons Learned

AICPAAICPA

Alan Anderson Alan Anderson

Senior Vice PresidentSenior Vice President

Page 2: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

In a Way it’s Simple… In a Way it’s Not…….

Tone at the TopTone at the Top Corporate GreedCorporate Greed Individual GreedIndividual Greed

Market EuphoriaMarket Euphoria Corporate ArroganceCorporate Arrogance High Risk DealsHigh Risk Deals

Page 3: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

In the Beginning…….

1985 Deregulation1985 Deregulation Houston Natural Gas and InterNorth mergerHouston Natural Gas and InterNorth merger Massive Debt coupled with loss of Massive Debt coupled with loss of

exclusive use of pipelinesexclusive use of pipelines ““Gas Bank” Gas Bank”

Page 4: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Corporate Culture

Best and the BrightestBest and the Brightest ““RICE” – Respect, Integrity, RICE” – Respect, Integrity,

Communication, ExcellenceCommunication, Excellence ““PRC” – Performance Review CommitteePRC” – Performance Review Committee Profits, Profits, Profits………..Profits, Profits, Profits……….. Enron Capital and Trade RecourcesEnron Capital and Trade Recources Enron Online (EOL)Enron Online (EOL)

Page 5: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Business Model

Enron Finance Corp. Enron Finance Corp. Enron Capital and Trade ResourcesEnron Capital and Trade Resources Enron Online (EOL)Enron Online (EOL)

Became a model for the industry Became a model for the industry Competition IncreasedCompetition Increased

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Financial Reporting Model

Mark to Market AccountingMark to Market Accounting SwapsSwaps Related Party Transactions Related Party Transactions SPE’s (Special Purpose Entities)SPE’s (Special Purpose Entities) Obscure DisclosuresObscure Disclosures Others????Others????

Page 7: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Potential Red Flags

unduly aggressive earnings targets management bonus compensation based on

those targets; excessive interest by management in

maintaining stock price or earnings trend through the use of unusually aggressive accounting practices;

Unduly aggressive financial targets and expectations for operating personnel;

.

Page 8: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Potential Red Flags (continued)

inability to generate sufficient cash flow from operations while reporting earnings and earnings growth;

assets, liabilities, revenues, or expenses based on significant estimates that involve unusually subjective judgments such as…reliability of financial instruments; and

significant related-party transactions.

Page 9: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Where were ……….

ManagementManagement Board of Directors and Audit CommitteeBoard of Directors and Audit Committee External AuditorsExternal Auditors Market Makers (Analysts) Market Makers (Analysts) Regulators (SEC, AICPA, others) Regulators (SEC, AICPA, others)

-That is what everyone is asking

Page 10: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

SEC Initial Response: Dec 11,2001

A system of “current” disclosures, supplementing and updating quarterly and annual information with disclosure of material information on a real-time basis;

Public company disclosure of significant current “trend” and “evaluative” data, in addition to historical information;

Identification of “most critical accounting principles” by all public companies

More timely and responsive accounting standard setting on the part of the private sector;

Page 11: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

SEC Initial Response: Dec 11,2001

An environment of cooperation between the SEC and registrants that encourages public companies and their auditors to seek advice on disclosure issues in advance;

An effective and transparent system of self-regulation for the accounting profession, subject to SEC’s rigorous, but non-duplicative, oversight; and

More pro-active oversight by audit committees who understand financial accounting principles as well as how they are applied.

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Meaningful Reform: will it…… 1. Help investors make informed investment 1. Help investors make informed investment

decisions?decisions? 2. Enhance audit quality and the quality of 2. Enhance audit quality and the quality of

financial reporting?financial reporting? 3.Help restore confidence in the capital markets, 3.Help restore confidence in the capital markets,

our nation’s financial reporting our nation’s financial reporting system, and the accounting profession?system, and the accounting profession?

4. Be good for America’s financial markets and 4. Be good for America’s financial markets and economic growth?economic growth?

Page 13: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Wide Range of Proposed Reforms

Federal & State Legislative ProposalsFederal & State Legislative Proposals SEC Chairman & President Bush ProposalsSEC Chairman & President Bush Proposals AICPA’s Main Views and ConcernsAICPA’s Main Views and Concerns Volcker’s Reform Proposals for AndersenVolcker’s Reform Proposals for Andersen Former POB Chair Bowsher’s Proposal Former POB Chair Bowsher’s Proposal Several States: NY, Mn, Fla. Ca. and othersSeveral States: NY, Mn, Fla. Ca. and others

Page 14: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Legislative Activity - U.S. Senate

Highest level of activity in 25 yearsHighest level of activity in 25 years Senate Banking Committee in LeadSenate Banking Committee in Lead Hearings on Enron debacle in March/AprilHearings on Enron debacle in March/April Many pending proposals being floatedMany pending proposals being floated Legislation likely in April/MayLegislation likely in April/May Many very important issues in playMany very important issues in play

Page 15: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Legislative Activity - U.S. House

Financial Services Committee in LeadFinancial Services Committee in Lead Oxley/Baker Bill likely vehicleOxley/Baker Bill likely vehicle Prohibit IA/IT services consistent with Prohibit IA/IT services consistent with

original SEC Chairman Levitt’s proposaloriginal SEC Chairman Levitt’s proposal Dingell introduced his own billDingell introduced his own bill New regulatory structure is almost assuredNew regulatory structure is almost assured Only question is how far it goes…….Only question is how far it goes…….

Page 16: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Proposals of SEC Chairman Pitt

New body dominated by public membersNew body dominated by public members New disciplinary mechanism New disciplinary mechanism SEC handles law violations itself SEC handles law violations itself Regulatory Body pursues ethical and/or Regulatory Body pursues ethical and/or

competence standards cases & complaintscompetence standards cases & complaints Quicker disciplinary proceedingsQuicker disciplinary proceedings Body publicizes results and imposes finesBody publicizes results and imposes fines

Page 17: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Reengineer Peer Review Approach

Replace triennial firm-on-firm peer reviewReplace triennial firm-on-firm peer review More frequent monitoring of audit qualityMore frequent monitoring of audit quality Use permanent Quality Control staffUse permanent Quality Control staff Body composed of knowledgeable people Body composed of knowledgeable people

unaffiliated with any accounting firmsunaffiliated with any accounting firms Staff deployed and overseen by new Staff deployed and overseen by new

publicly dominated body and its staffpublicly dominated body and its staff Limited to Auditors of Public CompaniesLimited to Auditors of Public Companies

Page 18: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Other Components of Pitt Proposals

Will ban IT and internal audit servicesWill ban IT and internal audit services But says if Congressional proposals to But says if Congressional proposals to

restrict more services go thru, we will have restrict more services go thru, we will have far worse quality audits than we have todayfar worse quality audits than we have today

Aggressive enforcement- CEOs & AuditorsAggressive enforcement- CEOs & Auditors Improvements on financial disclosuresImprovements on financial disclosures Timely reporting of events, stock sales, etc.Timely reporting of events, stock sales, etc.

Page 19: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

President Bush’s Key Proposals

Tougher oversight of auditors Tougher oversight of auditors CEOs sign off on full & honest disclosuresCEOs sign off on full & honest disclosures Take away bonuses & stock gains for Take away bonuses & stock gains for

executives when reporting is inaccurateexecutives when reporting is inaccurate Wants SEC to set scope limits vs.Congress Wants SEC to set scope limits vs.Congress Audit committees decide on non-audit workAudit committees decide on non-audit work Rejects tort reform, expensing stock optionsRejects tort reform, expensing stock options

Page 20: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

FASB to be more responsive

Board size being reduced, speed increasedBoard size being reduced, speed increased Fast track project to deal with SPEsFast track project to deal with SPEs Also dealing with guarantees of debt and Also dealing with guarantees of debt and

determining fair value on forward contractsdetermining fair value on forward contracts Move toward more focus on principles Move toward more focus on principles Accounting details for IASB, not IFACAccounting details for IASB, not IFAC But clear support for working with IASBBut clear support for working with IASB

Page 21: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

AICPA Input and Views

Testifying in Congressional hearingsTestifying in Congressional hearings Providing constructive inputProviding constructive input Zero tolerance for violation of rules or lawsZero tolerance for violation of rules or laws Urging all to be wary of simplistic solutions Urging all to be wary of simplistic solutions

which can lead to unintended consequenceswhich can lead to unintended consequences Working to limit cascade effectWorking to limit cascade effect

Page 22: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

New Public Regulatory Organization

Radical change from last 25 yearsRadical change from last 25 years Move from Public Oversight to Public Move from Public Oversight to Public

ParticipationParticipation New robust private sector regulatory bodyNew robust private sector regulatory body Independent of the accounting professionIndependent of the accounting profession Structured with SEC oversight to handle:Structured with SEC oversight to handle:

Professional discipline and quality reviewProfessional discipline and quality review Eventually auditor independence issues Eventually auditor independence issues

Page 23: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Roles of the New Regulatory Body

Perform quality reviews of audit firmsPerform quality reviews of audit firms Enforce compliance with professional stdsEnforce compliance with professional stds Discipline for violations of prof stdsDiscipline for violations of prof stds Establish rules deemed necessary for such Establish rules deemed necessary for such

reviews and enforcementreviews and enforcement Later influence new independence standards Later influence new independence standards

and other standards (eg. audit standards) and other standards (eg. audit standards)

Page 24: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Important Process Issues

Regulatory Body serves as disciplinary and Regulatory Body serves as disciplinary and quality review board, not standards setterquality review board, not standards setter

Ability to move quickly, keep information Ability to move quickly, keep information confidential, and take remedial actionsconfidential, and take remedial actions

Able to compel production of documents Able to compel production of documents and protect documents reviewed from and protect documents reviewed from discovery or admissibility in civil litigationdiscovery or admissibility in civil litigation

Page 25: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Non-Audit Services

Some are necessary part of modern auditSome are necessary part of modern audit O’Malley Panel - some improve qualityO’Malley Panel - some improve quality Audit quality dependent on auditor qualityAudit quality dependent on auditor quality AICPA urges caution, impactsAICPA urges caution, impacts

Audit QualityAudit Quality Future StaffFuture Staff

New restrictions should not impede audit quality New restrictions should not impede audit quality or the quality of financial reportingor the quality of financial reporting

Page 26: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Restrictions - Non-audit services

Agree to restrict IT and Internal AuditAgree to restrict IT and Internal Audit Oppose ban on Oppose ban on allall non-audit services non-audit services Many unintended consequences:Many unintended consequences:

Onerous to smaller companies - costlyOnerous to smaller companies - costly Ripple effect to non public companiesRipple effect to non public companies Overrides informed and reasoned Overrides informed and reasoned

decision-making by audit committeesdecision-making by audit committees

Page 27: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Risk of Creating Audit Only Firms

Threat is the risk to audit qualityThreat is the risk to audit quality Skills/expertise outpaced by changes in Skills/expertise outpaced by changes in

business practices and financial transactionsbusiness practices and financial transactions Less knowledge of client businessesLess knowledge of client businesses Will lead to loss of necessary expertiseWill lead to loss of necessary expertise Eventually, scale and other factors will lead Eventually, scale and other factors will lead

to audit quality deteriorationto audit quality deterioration

Page 28: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Corporate Governance

Public reporting of audit committee charterPublic reporting of audit committee charter Audit committees should hire/fire auditorsAudit committees should hire/fire auditors And evaluate relationships and services of And evaluate relationships and services of

the audit firm for conflictsthe audit firm for conflicts Harmful to cast a dark cloud over all Harmful to cast a dark cloud over all

services outside the statutory audit services outside the statutory audit Rely on knowledgeable members to decideRely on knowledgeable members to decide

Page 29: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Mandated Auditor Rotation

Audit firm rotation has been proposedAudit firm rotation has been proposed Most believe the costs outweigh the benefitsMost believe the costs outweigh the benefits Does not pass public interest testDoes not pass public interest test Would create significant proposal frenzyWould create significant proposal frenzy Rotation of team members seems adequateRotation of team members seems adequate Loss of knowledge of company hurts a lotLoss of knowledge of company hurts a lot

Page 30: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Tort reform ideas

Reasoned law critical to integrity of marketsReasoned law critical to integrity of markets 1995 law enacted to deal with abuses1995 law enacted to deal with abuses Liabilities are still an enormous deterrentLiabilities are still an enormous deterrent Securities class actions cases are on the riseSecurities class actions cases are on the rise Average settlements are also way upAverage settlements are also way up Profession opposes reform of current law Profession opposes reform of current law Concerns about liability are globalConcerns about liability are global

Page 31: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Employment Restrictions

There are many safeguards required todayThere are many safeguards required today Some legislators propose more restrictionsSome legislators propose more restrictions Like one or two year cooling-off period Like one or two year cooling-off period Many sound easy, but are hard to effectMany sound easy, but are hard to effect They can severely limit eligible audit firmsThey can severely limit eligible audit firms Putting limits on individual careers and Putting limits on individual careers and

client recruiting efforts are hard to legislate client recruiting efforts are hard to legislate

Page 32: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Financial Reporting Reforms

Improved disclosures – “plain English”Improved disclosures – “plain English” More timely reporting to investors More timely reporting to investors Client reporting on their internal controlsClient reporting on their internal controls Auditor assurance on internal controlsAuditor assurance on internal controls Increased resources for the SEC to oversee Increased resources for the SEC to oversee

financial reporting disclosuresfinancial reporting disclosures

Page 33: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Modernizing Business Reporting

Unreported intangibles and discussion of Unreported intangibles and discussion of riskrisk

Off balance sheet activityOff balance sheet activity Non-financial performance indicatorsNon-financial performance indicators Forward-looking informationForward-looking information Enterprise opportunity and riskEnterprise opportunity and risk More Timely reporting (movement toward More Timely reporting (movement toward

continuous disclosure)continuous disclosure)

Page 34: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Broader Perspective Needs

Broader “bandwidth” of info for investors, a Broader “bandwidth” of info for investors, a recommendation long advocated by AICPArecommendation long advocated by AICPA

New distribution channels that recognize New distribution channels that recognize the ubiquity of the Internet communicationthe ubiquity of the Internet communication

Increased financial reporting frequency, and Increased financial reporting frequency, and ultimately online, real-time reportingultimately online, real-time reporting

Page 35: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Volcker Proposals for Andersen

Volcker wants Andersen rehabilitated and Volcker wants Andersen rehabilitated and serving as the gold standard for auditingserving as the gold standard for auditing

Really wants to reform a resisting industry Really wants to reform a resisting industry This creates concerns for AICPA & Big 4 This creates concerns for AICPA & Big 4

Split of audit and consulting businessesSplit of audit and consulting businesses Separate partnerships; no profit-sharingSeparate partnerships; no profit-sharing Much broader restrictions of servicesMuch broader restrictions of services

Page 36: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Other Controversial Volcker Ideas

Proposed new restrictions on services:Proposed new restrictions on services: ““Aggressive” tax planning servicesAggressive” tax planning services Presumably includes creating tax sheltersPresumably includes creating tax shelters Legal services and some advocacy rolesLegal services and some advocacy roles Tax & accounting services for executivesTax & accounting services for executives

Also favors cooling off period for partners Also favors cooling off period for partners joining clients, and 5 year joining clients, and 5 year partnerpartner rotation rotation

Page 37: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

POB Reverses Long-standing Views

Public Oversight Board quits/terminatesPublic Oversight Board quits/terminates POB Chairman testified March 19POB Chairman testified March 19 Highly critical of professionHighly critical of profession Propose unrealistic measuresPropose unrealistic measures Far in excess of Pitt and Bush ProposalsFar in excess of Pitt and Bush Proposals Favors big legislative solutionsFavors big legislative solutions

Page 38: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

A Very Political Process

Congress is more involved than ever beforeCongress is more involved than ever before Issues are red hot and elections coming upIssues are red hot and elections coming up High risk of harsh legislative solutionsHigh risk of harsh legislative solutions Profession working with legislatorsProfession working with legislators Trade-offs in SEC vs. legislative solutionsTrade-offs in SEC vs. legislative solutions Very hard to forecast the end resultsVery hard to forecast the end results

Page 39: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Recap of Key Issues in Play

Scope of service/independence restrictionsScope of service/independence restrictions Considering perception versus realityConsidering perception versus reality Audit committee judgment or bright lines Audit committee judgment or bright lines

Audit firm or partner rotation proposalsAudit firm or partner rotation proposals Firm rotation mandates create concernsFirm rotation mandates create concerns Appropriate limits on rotation of peopleAppropriate limits on rotation of people

Page 40: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Other Key Issues in Play

Revolving door/ hiring audit firm peopleRevolving door/ hiring audit firm people Peer review/ new quality assurance Peer review/ new quality assurance New regulatory structure for professionNew regulatory structure for profession New disciplinary structure & protectionsNew disciplinary structure & protections Auditor/audit committee relationshipAuditor/audit committee relationship Corporate governance reformsCorporate governance reforms

Page 41: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Other Key Issues in Play

Accounting standardsAccounting standards Process & timeliness improvementsProcess & timeliness improvements Depth and coverage of standardsDepth and coverage of standards

Auditing standardsAuditing standards Responsibility for fraud detection Responsibility for fraud detection Fraud reporting reqts and standardsFraud reporting reqts and standards

Page 42: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Other Reform Issues in Play

Who pays for audits Who pays for audits SEC/FASB/Regulatory Body fundingSEC/FASB/Regulatory Body funding Tort reform Tort reform Deductibility of stock optionsDeductibility of stock options Tax shelter changesTax shelter changes Pension and 401-K reformsPension and 401-K reforms

Page 43: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Remember: There will always be Strains on the System of Checks and Balances

ManagementManagement Boards of Directors and its CommitteesBoards of Directors and its Committees Independent AuditorsIndependent Auditors Security AnalysistsSecurity Analysists Regulators (SEC, FASB and others)Regulators (SEC, FASB and others)

Page 44: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Foundation for the Future

Must work to protect the public interest Must work to protect the public interest under the current reporting modelsunder the current reporting models

Must work to develop approaches and Must work to develop approaches and programs to respond to marketplace programs to respond to marketplace demands for assurance under “New demands for assurance under “New Economic” modelsEconomic” models

Page 45: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Convergence

Blurring of Boundaries betweenBlurring of Boundaries between Auditing of Financial StatementsAuditing of Financial StatementsAssuranceAssurance Attestation on Financial and non-Attestation on Financial and non-

financial itemsfinancial items Need for on-line real time assuranceNeed for on-line real time assurance

Page 46: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

What it takes to get Real Time Assurance. Reliable systems Reliable systems a common method of disseminating information on the a common method of disseminating information on the

internetinternet reporting on subsets of financial data as well as non reporting on subsets of financial data as well as non

financial data, industry specific rather than one size fits all, financial data, industry specific rather than one size fits all, common global approachcommon global approach

corporate accountability including management integrity, corporate accountability including management integrity, solid enterprise risk management solid enterprise risk management

Understandable disclosures including the ability to ‘drill Understandable disclosures including the ability to ‘drill down” into expanded discussion if the user desires to do sodown” into expanded discussion if the user desires to do so

Page 47: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

AICPA Initiatives

Reliable SystemsReliable Systems

Method of Method of Disseminating Disseminating InformationInformation

Financial Data and Financial Data and Non Financial DataNon Financial Data

Trust Family Trust Family (Systrust) (Systrust)

XBRLXBRL

VMRCVMRC Performance View Performance View

Page 48: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

AICPA Initiatives Corporate AccountabilityCorporate Accountability

Understandable disclosures Understandable disclosures

Trust Family Trust Family (Webtrust)(Webtrust)COSO ERM ProjectCOSO ERM ProjectASB Fraud StandardASB Fraud StandardEnvironmental Environmental ReportingReporting

Audit Committee RulesAudit Committee Rules

FASB ProjectsFASB ProjectsVMRCVMRCSEC “Plain English” PlanSEC “Plain English” Plan

Page 49: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

Recap

Uncertainty where Enron debacle will endUncertainty where Enron debacle will end Profession needs to play leadership roleProfession needs to play leadership role Avoid overreaction & simplistic solutions Avoid overreaction & simplistic solutions Consider unintended consequencesConsider unintended consequences Focus on the public interest in all we doFocus on the public interest in all we do

Page 50: ENRON: Aftermath…….Lessons Learned AICPA AICPA Alan Anderson Senior Vice President.

In Summary

We must work to build a foundation for the We must work to build a foundation for the future to continue to protect the public future to continue to protect the public

We must be responsive to marketplace We must be responsive to marketplace changes as our audit model will continue to changes as our audit model will continue to decline in relevancedecline in relevance

We should work together Globally We should work together Globally whenever possiblewhenever possible