Integrity of Accountants

In the article, ‘Lawyers and Accountants Once Put Integrity First’, Mark W. Everson discusses how the accounting and law practices have become more of a profit oriented business in recent years. Fifty years ago these industries were thought of as pillars of the financial system. They were trusted by society to uphold the federal guidelines and to protect the country from corporations taking part in unreasonably highly risky business practices. Mark W. Everson states, “But over time, attorneys and auditors came to see their practices not as independent firms that strengthen the integrity of capitalism, but as businesses measured chiefly by the earnings of their partners.” What he means by this is these attorneys and auditors are more worried about the profits they put in their pockets than the integrity of their industry.

One of the biggest fields that this is shown in is the field of tax law. In tax law there is so much gray area and room for interpretation of the laws that companies must pay tax professionals a very handsome sum of money to navigate this tricky field. These tax professionals must examine every aspect of the corporation to insure that all forms of income have been accounted for and properly recorded on the correct tax form. They are also responsible for finding every little tax write-off possible. Some of these tax write offs can be questionable and not straight forward to an individual without the proper training. Corporations are willing to pay this due to the fact that even with these high fees paid to accountants it will save them money in the long run by minimizing tax obligations. These corporations must put their faith in these accountants because even if it is an independent accounting firm that prepares a corporation’s tax return it is still the corporation that will be responsible for any penalties or fees imposed upon them by the Internal Revenue Service. These penalties and fees can be rather hefty in certain circumstances.

That is why most major corporations only trust their accounting needs to one of the Big Four accounting firms. Even this does not guarantee that things will be done correctly. This was demonstrated with great emphasis in the case of Enron. In this case Arthur Anderson, one of the five biggest accounting firms in the world, at the time, was responsible for the auditing of Enron. Even with Arthur Anderson’s great reputation and world class accountants they were unable to foresee the catastrophic collapse of Enron. I believe this is due to the fact that Arthur Anderson was more concerned about satisfying a multi-million dollar account than it was concerned with upholding its industries integrity standards. Arthur Anderson seemed to be so worried about losing this account so they overlooked vital details in the financial reports that should have indicated the serious problems that Enron was facing. This concern with stuffing their pockets just a little bit fuller eventually caused them to lose everything. Since the collapse of Enron Arthur Anderson has completely dissolved and any individual involved with the company at the time of the Enron scandal has lost all of the industries respect. Integrity is a vital part of the accounting industry because without it no one will trust your work.

Everson, Mark. "Lawyers and Accountants Once Put Integrity First." New York Times 06 18 2011. n. pag. Web. 31 Oct. 2011. <http://www.nytimes.com/2011/06/19/opinion/19everson.html?ref=accountingandaccountants>.