Volume 11, Nos. 2 & 3

 

What Keeps The SEC Busy - 2002:  Enron, mostly. In early December, the American Institute of Certified Public Accountants held its annual "Current SEC Developments Conference" in Washington, DC. The lengthy conference featured FASB and AICPA speakers, but the main attractions for public accounting practitioners were the new Chief Accountant, and other speakers from the Office of the Chief Accountant and Division of Corporation Finance. Being the dominant forum of its kind, the conference provides a venue for the SEC staff to warn literally thousands of auditors for publicly-traded companies about unacceptable financial reporting practices before the year-end audit season hits high gear. Critics deride it as "instant GAAP" - but smart auditors pay attention. As you would expect, Enron's self-immolation permeated the conference; not so much because of specific audit issues, but because it's the stuff of auditor nightmares. Most of the conference's attendees go each year to increase their audit sensibilities and awareness; Enron increased the "urgency factor" by about a hundred-fold. What's in the conference for investors? They need to groom their skepticism when its their turn to review annual reports in a few months. The SEC gets to see the financial statements first, with all the warts; investors get to see them after their removal. Here's where the SEC found the warts in 2001 - and they were in more places than Enron.

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