ALL THE COUNTS AND NO-A-COUNTS

All the Counts and No-A-Counts.

"It was the night of the King's castration, he was about to give his last ball. All the Counts and No-A-Counts were gathered around the four corners of the round table."

(From an old ditty a drinking buddy could recite flawlessly. I would give a citation if I could. Sorry).

There is another bit I recall and which may contain truth regarding what also ails our society today:

"Balls," cried the Queen, if I had 'em, I'd be King!" (But, I digress. This is a topic for another day. Or, are they related)?

All the accountants and no accounting. How's that for a diagnosis?

One of the homilies I constantly repeated to my kids as they were growing is "Never before in the history of civilization have we had so many accountants and so little accountability." When I would expand on this, which was most of the time, I would also tell them that people with very little education built this country. Eighth grade or high school was sufficient, because people made what little they had count.

On the other hand, this country is being dismantled, betrayed, by those with too much education.

The Enron Debacle has touched a nerve. My education, training, and vocation were in accounting and auditing. I go back to the days when there were the "Big 8" accounting firms. Now there are six, I believe. (My daughter, who is in college studying business, says there are only five. And, no, she didn't listen to me and is paying around $4,000 per year for them to fill her head full of ....).

I was proud to be a Certified Public Accountant, CPA, back in the days when it was an honorary title; the days before the CPA certificate became the minimum requirement to practice public accounting. One day I was a businessman helping other businessmen and doing that which was good. The next, I was a bureaucrat expected to put the squeeze on my clients because of new requirements and doing that which was supposed to protect the profession. What had happened?

Well, there was the Penn Square Debacle and others during the 1970s. Events similar to Enron. Major fraud that was not uncovered by the independent accountants because of accident, incompetence, or criminal act. There was talk of having Congress get involved in the regulation of public accounting. The big boys in the industry didn't want that. They sold the idea of 'self-regulation.'

The accounting societies made new requirements, new procedures, and new checklists. In addition to the old full 'audit' and the 'compilation,' we were given a 'review' with audit testing that was in between the other two in degree. "Peer Review" was required. States followed up with new 'Continuing Education' requirements. Licensed Public Accountants, LPAs, in Washington State were made CPAs by law and the title was abolished. Only CPAs could call themselves "accountants."

Having done nothing wrong, we were punished and taxed for the shenanigans of others who were allowed to walk. Life became much more difficult for no good reason at the lower level most independent public accountants operated. And, the bigger boys were there to look into your shorts now.

Procedures, procedures, procedures. The way that damages could be assessed for bad audits was through a showing of a criminal act or gross negligence. Following procedures, even if they were worthless, became more of a defense against gross negligence. Adherence to procedures became dogma, an expensive, spirit-destroying obeisance to the unnecessary.

Some procedures are very useful, but when following procedures becomes an excuse and a new art form for deception, i.e., a loophole to avoid punishment and an excuse for gullibility, society is the victim.

In my years of practice, "The Sniff Test" never failed me. Some things can be dealt with on a 'gut level,' thus avoiding expensive testing. (Look at what has happened in medicine and all the expensive tests that doctors must require in order to protect their backsides).

Society as a whole benefits when individuals (whether accountants, doctors, mechanics, or others) assume risk and stand behind their work. They are not permitted this any more. Someone else is dictating the risk that they may assume. They are punished not because they do anything bad. They are punished for not requiring the unnecessary and/or unaffordable be done. They are punished for believing that their expertise and first hand knowledge is more valuable and relevant than someone else's.

Bad things happen. Good people make honest mistakes. Other people must suffer the consequences. "Shit happens!" I would still assert that society is better off with decent people exercising independent judgement than with immoral or amoral people following procedures, especially when those procedures have been designed to protect those who are using them. The latter is too expensive. Those who slavishly follow procedures have a larger overhead and may have to be more unscrupulous to survive. Their clients must pay more. Society must pay more.

Only five or six big accounting firms left. Something tells me that, if there were not something wrong, there would be fourteen or perhaps fifty-five or even 756 big accounting firms. With the growth in our economy since the 1970s, why would there be fewer?

My nose tells me that Enron was a fraud. It was too good to be true. Being what I am, I cannot conceive of it going undetected as long as it did. None of the big frauds (Penn Square, Nugan Hand Bank, Bank of Commerce and Credit, (BCC), etc.) could have long survived without, I suspect, complicity on the part of the outside auditors. For that, a certain type of audit firm is required. Thus, you can't permit many.

All the accountants and little accountability.

Maybe Queenie has stolen their souls if not their balls. It is all CYA now. (Is this a predictable consequence of granting homosexuality larger acceptance? If not, why do we keep bending over and spreading our cheeks)?

Want to bet that Arthur Andersen LLP, the outside auditor, finds a loophole to minimize their culpability based upon 'following procedures?' After all, in November, they did notify the internal audit committee at Enron that some criminal (excuse me, "illegal") acts may have been committed. Just because Enron went in the toilet in October shouldn't be held against them.

(Note: As of June 17, 2002, it looks as if it has gone past this point for Arthur Andersen. They just lost their obstruction of justice trial).

When you invest so much money and time in 'education,' do you have to have scams to cover this 'overhead?' How else are all those kids going to repay those big student loans? No?

Why, then?

Copyright © 2002, Donald L. Beeman. All rights reserved.

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