SEC Probe Into Accenture -- Sens, Senate campaigns 2004 & 2006

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Date Posted: 09:46:56 03/20/05 Sun
Author: No name
Subject: SEC Probe Into Accenture
In reply to: 's message, "FBI Investigate Haliburton No Bid Deal" on 09:45:45 03/20/05 Sun

Here's a story that could mushroom, should Accenture handle the matter improperly (from CNET):
Technology services giant Accenture said Friday that the U.S. Securities and Exchange Commission plans an informal investigation of an incident involving the company. In a public filing, Accenture said the probe concerns "an incident of possible noncompliance with the Foreign Corrupt Practices Act and/or with Accenture's internal controls in connection with certain of Accenture's operations in the Middle East."
This may prove to be nothing, or it may show a lack of organizational learning within the company. Accenture, once known as Andersen Consulting, has a long history of poor judgment. Most recently, many of us are probably aware of Andersen's role in the collapse of Enron: when Andersen's auditors tried to give a correct assessment and set of recommendations to Enron for public knowledge, Enron was able to convince Andersen's senior partners to overrule the auditors' advice. Andersen's partners, in complying with Enron's request for a favorable audit, compromised the integrity of the company, leaving the rest for history.

Those with a longer-term memory, however, may remember Andersen's role in the collapse of DeLorean. When Andersen auditors discovered that DeLorean was charging many personal expenses to the company, they accepted the CEO's explanations of the expenses rather than expose them. DeLorean collapsed, the British government sued Andersen for vouching for DeLorean and Andersen settled out of court. But that's not all. The Andersen representative in charge of the DeLorean account got promoted and became the head of Andersen's U.S. audit division in 1987. In 1989 he became the head of Andersen's worldwide audit and tax practice. These promotions sent a signal to the company's employees: selling accounts for short-term profits mattered more than producing auditing reports with integrity.

Similar patterns appeared when Andersen's audits failed to uncover problems in other companies before Enron. These companies included Lincoln Savings and Loan, which collapsed in 1992, and Waste Management Inc., which encountered allegations of fraud in 1999.

Now that Andersen's consulting business (now known as Accenture) split away from the auditing firm, the CNET story now makes me wonder whether the change really made any difference. Or, is it really the case that the company's split-up was just a disingenuous attempt to give the appearance of a newfound integrity?

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Replies:

Accenture ties with SEC -- No name, 09:48:12 03/20/05 Sun