What did this mean to a 19-year-old Canadian accounting student with no share holdings and no knowledge of the energy trading giant from Texas? Actually, a lot more than I’d ever have imagined.
From then on, every single accounting or even business class I took touched on Enron in one way or another. I don’t think another class of accounting students got such an in-depth education in various types of off-balance sheet financing.
The business ethics course I took during the balmy summer of 2003 was dominated by Enron. Sure, there were other cases. Eli Lilly and Union Carbide spring to mind. But Enron was dominant. And, as accounting students, Arthur Andersen’s complicity in Enron’s deception was also a focal point in class discussions.
We studied Sarbanes-Oxley, the comprehensive legislation enacted in the wake of Enron and aimed at preventing a repeat, as it occurred. It’s primary focus is on documenting controls. At the time I probably knew more about Sarbanes-Oxley’s requirements than the people it was going to affect the most – management at American companies.
Right around that time the reference in the CICA Handbook to “assuming management’s good faith” was removed, mainly to avoid the legal liability issue that such an assumption may give rise to in the event of another Enron.
Enron changed a lot. Accounting was thrust into the spotlight in terms of further government regulation, the Big Five became the Big Four accounting firms, and nothing will ever be like it was.