The Role of the Accounting Professional
The Importance of Accounting Professionals in the Investigation
There is no doubt the high-profile cases of WorldCom, Enron, Tyco, Adelphia, AIG, and others brought an increased public scrutiny of accountants. The demise of the Arthur Andersen firm was directly related to Enron and probably brought the accounting profession to the front lines more than any other single incident. Since the turn of the century there has been much more litigation against accounting firms for their failure to detect fraud. Investors and clients alike have raised outside accountants and auditors to the top of the defendant list, likely because of the hefty malpractice policies accountants carry as well as their propensity to settle claims. The case most notable in recent years would be that of Bernie Madoff. Many accounting firms have been targeted as a result of the massive Ponzi scheme, resulting in losses estimated around $60 billion. Lawsuits will continue for years to come in that case alone, as investors seek any means possible to recover any portion of their lost investments. In my practice I have seen more and more inquiries into the role and responsibilities of the accountants and auditors, especially in embezzlement cases.
Much was written about the state of the accounting profession in the period following Enron and WorldCom, but in recent years, especially after the dust settled on SOX and the newly formed Public Company Accounting Oversight ...