Some have unfairly implicated accountants, others have scapegoated auditors where in reality the responsibility should have been more widely shouldered.
But as we get ready to draw a veil over the past 12 months, there is little doubt that accountancy’s reputation is somewhat more tarnished at the end of 2002 than it was at the beginning.
Right at the heart of all this was, of course, the collapse of Andersen.
It provided most of the defining moments of this year and probably – in terms of financial news – of the last decade. No other professional services organisation of a similar size or standing has unravelled so quickly or so comprehensively.
But from the moment the firm’s then CEO Joe Berardino admitted at the tail-end of 2001 that there had been mistakes in its audit of Enron, the game was up. To watch it collapse was at times painful. The press conference at which John Ormerod, Andersen’s UK boss, announced to a hostile media that he was pursuing a merger with KPMG was awkward to say the least.
But it was Ormerod’s appearance on Newsnight that made for the most uncomfortable viewing.
Those 13 minutes 20 seconds had to be the most nerve-wracking of his professional life. At the time, Ormerod was not even a year into his job, yet it fell to him to defend the integrity of his firm – in which he has spent his entire professional life – over the collapse of Enron and Andersen’s confession in the US that it had shredded documents and ‘made an error in judgement’.
He said there were broad lessons to be learnt from the collapse of Enron.
Jeremy Vine replied that since Ormerod could not explain what happened, how could he draw any lessons? In media parlance he was ‘kebabbed’ by Vine, one of the BBC’s toughest interviewers.
And Ormerod was not treated much more kindly elsewhere in the media, although he won plaudits for the way in which he secured a safe haven for the majority of Andersen staff and partners at Deloitte & Touche.
He would have felt some vindication last month when Accountancy Age readers voted him their personality of the year.
Throughout the turmoil of 2002, one accountant whose already considerable reputation was enhanced was ICAEW president Peter Wyman. He was, to use the words of a Big Four senior partner, ‘the right president at the right time’.
It was hard to escape Wyman as he stepped from the studios of Radio 4’s Today programme to conference floors up and down the country. But he perhaps did more than anyone to stem the tide of unfavourable publicity washing over the industry.
Wyman shouted loudest that Enron could not happen here because of the principles underlying UK accountancy standards and the corporate governance improvements made in the City in the wake of the Barings, Polly Peck, BCCI and Maxwell scandals of the 1980s.
And it was a message he was prepared to deliver globally from Brussels to Washington where he met with the US Securities and Exchange Commission to recommend, diplomatically, how it could get its house in order.
As Wall Street reeled from corporate scandal after corporate scandal and the storm threatened to cross the Atlantic, plenty of sceptics questioned Wyman’s tactics in standing up for UK accountants. His insistence that UK rules would prevent an Enron-style collapse contrasted with that of Sir Howard Davies, chairman of the Financial Services Authority. In February, Sir Howard said: ‘The Enron collapse has been on such a scale that it has made waves elsewhere in the world, and certainly in London. The big question is – could it happen here? The only honest answer is yes.’
It is debatable whether luck or judgement has prevented that. We have not been without our problems (ask Marconi, My Travel or SFI) but we have not experienced anything like the scale of financial turmoil that has hit US companies.
So far, there have been few changes to the domestic environment in response to Enronitis. Brussels has issued proposals to tighten up corporate governance across Europe while Washington has reacted with the notorious Sarbanes-Oxley Act which forces CEOs and CFOs of any company with US securities to swear to the accuracy of their accounts.
Domestic changes are likely in January when the DTI announces the outcome of its review of audit and accountancy regulation in the UK. Under those and other changes the Accountancy Foundation is expected to undergo significant reform while the role of non-executive directors is likely to be enhanced once the Higgs report is published early in the new year.
2002 will almost certainly go down as accountancy’s own annus horribilis.
Unless of course 2003 is worse. We should all hope it isn’t.
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