When Foxes Guard the Hen House


I read “The Rise and Fall of Enron” ( JofA, Apr.02, page 41). As reported in the national media, Arthur Andersen’s apparent “cooking of the books” was created by the firm’s unique policy decision related to final accounting interpretations.

That decision—to have local offices override accounting policy decisions made by Andersen’s corporate office in Chicago—is the smoking gun of the accounting profession. From what I have read, no other national accounting firm has this policy; no local office can override significant accounting policies that require “clarification.”

The former Enron auditor, who was on the policy committee and then relieved of those duties after the company complained, clearly understood that pressure from the Houston office overwhelmed the corporate office.

The lack of an Arthur Andersen independent accounting interpretation group that could override client-pressured local offices apparently led to the debacles at Enron and Global Crossing, both Arthur Andersen clients. In my opinion, these represent cases of “buying an opinion”—something that was taught as being unconscionable when I attended college.

When foxes guard the hen house, chickens get eaten. Please give more accurate, meaningful information in the JofA than what the rest of the media provide.

Dan Frank, CPA
Seal Beach, California


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.