Tuesday, May 30, 2006

ENRON'S IMPACT -- Some question whether corporate America has changed in the wake of corporate scandals:

But despite the aggressive prosecutions and tough new laws designed to prevent a repeat of the deception that cost shareholders, investors and employees billions of dollars, fraud in the workplace is alive and well in the post-Enron era. From the mailroom to the boardroom, employees are still busy stealing from their employers and shareholders.

“We're not seeing a tremendous reduction in the amount of fraud out there,” said Bruce Dubinsky, a forensic accountant based in Bethesda, Md.

There is no question that tougher laws and more aggressive enforcement have had an impact on corporate accounting. Among other measures, the 2002 Sarbanes-Oxley Act, motivated by the Enron collapse and other scandals, required companies to set up comprehensive internal controls and established a new federal board to oversee auditors. It also demanded that top executives sign off on their companies’ financial statements — holding them personally liable if it was later found that someone else had cooked the books.

Update -- Having said that, apparently the verdict is good for investors because it signals that corporate execs, when caught, are held accountable.