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After the collapse of Enron and scandals at Worldcom, Tyco, and others back in 2001-2002, Congress moved quickly to enact legislation to increase protection for investors in public companies. I was in grad school (accounting) at the time. The US was also in a recession and jobs were hard to come by, even for accounting students at BYU (which is unusual). I remember only one person was offered an internship to a Big Five firm in SLC and it was given to the BIL of the KPMG recruiter.
I missed out on an internship in my last summer in the program, but I did accept an offer from Arthur Andersen in Phoenix to participate in a leadership week. I targeted Phoenix for my Andersen interviews but they weren't taking interns, however to keep the BYU pipeline open they would bring in students for a couple days and show them around the office, pamper them a bit in the city, then send them off to the Andersen facility in St. Charles for some more schmoozing with Andersen top executives, all in the effort to get us to sign on full time when we graduate. I was excited that I at least had something going for me that summer, although I had a long time to wait. Interviews always took place in the fall and I had accepted my offer in the late fall of 2001.
In December 2001 Enron filed for bankruptcy. I remember, probably more vividly than most, the fallout and the aftermath at least from the Andersen side. At its peak, Enron was the 6th largest public company in the US and it fell, hard and quick, leaving many people looking for someone to blame. The obvious targets are the executives and auditors (why are the lawyers never blamed in these things?
). I remember Andersen taking a beating, and somewhat rightly so, due to its mismanagement of the investigations and its really poor PR skills. In early 2002 me and several other candidates for Andersen began to wonder what was going to happen the firm. I sent emails off to the recruiter and she promptly replied back. She attempted to communicate a sense of calm and ultimately told us the firm would survive and things would be fine in the summer. Well, things got worse and despite the "uplifting" follow up emails we received, I think we all knew better.
I remember receiving a final phone call sometime in March/April 2002. I wish I had recorded that phonecall as it was short and to the point. It confirmed my suspicions that things were not well at the firm and that people were now entering a state of self-preservation. Basically the firm was hemorraging talented employees by this point and those employees were sure to bring clients over to their new firms. It was kind of surreal talking to this person and knowing that they would very soon be out of job. I remember feeling very somber, not for the loss of my summer adventure, but more for this young recruiter and mostly for the BYU students that were graduating and going through the same issue as me, only they were losing a full-time job. Thankfully most of them were able to find similar work at other firms. Everything ultimately turned up fine for me. I got the full time job I really wanted and to pass the time in the summer I did an internship for a local CPA firm.
While the efficacy of SOX has been widely debated, and some people still call for its repeal, I ultimately think SOX has been a net positive for the capital markets. Like a lot of legislation that is passed in response to a crisis (think Dodd-Frank) it is the knee-jerk reaction that results in some very bloated and cumbersome regulations. However, once implemented those regulations usually get scaled back to more workable levels. One good example in SOX is the requirement for auditors to attest on internal controls. Initially auditors had to not only attest on the efficacy of controls, but they also had to attest on management's process of determining the efficacy of internal controls. Both of these attestations were required for the first 3-4 years of SOX, however sometime in 2006 the PCAOB (which was created by SOX) decided to drop the requirement to evaluate managements process, which ultimately reduced a good amount of work for the auditors.
Anyway, I know that is long, but felt I'd share my run in with Enron/Andersen/SOX. I do wonder if anyone here was effected by the passage of SOX?
P.S. I go to lunch frequently with a friend that worked for Andersen and was on the Enron account. He was a new staff at the time and spent some time in the Enron document shredding room putting documents into the shredder.
I missed out on an internship in my last summer in the program, but I did accept an offer from Arthur Andersen in Phoenix to participate in a leadership week. I targeted Phoenix for my Andersen interviews but they weren't taking interns, however to keep the BYU pipeline open they would bring in students for a couple days and show them around the office, pamper them a bit in the city, then send them off to the Andersen facility in St. Charles for some more schmoozing with Andersen top executives, all in the effort to get us to sign on full time when we graduate. I was excited that I at least had something going for me that summer, although I had a long time to wait. Interviews always took place in the fall and I had accepted my offer in the late fall of 2001.
In December 2001 Enron filed for bankruptcy. I remember, probably more vividly than most, the fallout and the aftermath at least from the Andersen side. At its peak, Enron was the 6th largest public company in the US and it fell, hard and quick, leaving many people looking for someone to blame. The obvious targets are the executives and auditors (why are the lawyers never blamed in these things?
). I remember Andersen taking a beating, and somewhat rightly so, due to its mismanagement of the investigations and its really poor PR skills. In early 2002 me and several other candidates for Andersen began to wonder what was going to happen the firm. I sent emails off to the recruiter and she promptly replied back. She attempted to communicate a sense of calm and ultimately told us the firm would survive and things would be fine in the summer. Well, things got worse and despite the "uplifting" follow up emails we received, I think we all knew better.I remember receiving a final phone call sometime in March/April 2002. I wish I had recorded that phonecall as it was short and to the point. It confirmed my suspicions that things were not well at the firm and that people were now entering a state of self-preservation. Basically the firm was hemorraging talented employees by this point and those employees were sure to bring clients over to their new firms. It was kind of surreal talking to this person and knowing that they would very soon be out of job. I remember feeling very somber, not for the loss of my summer adventure, but more for this young recruiter and mostly for the BYU students that were graduating and going through the same issue as me, only they were losing a full-time job. Thankfully most of them were able to find similar work at other firms. Everything ultimately turned up fine for me. I got the full time job I really wanted and to pass the time in the summer I did an internship for a local CPA firm.
While the efficacy of SOX has been widely debated, and some people still call for its repeal, I ultimately think SOX has been a net positive for the capital markets. Like a lot of legislation that is passed in response to a crisis (think Dodd-Frank) it is the knee-jerk reaction that results in some very bloated and cumbersome regulations. However, once implemented those regulations usually get scaled back to more workable levels. One good example in SOX is the requirement for auditors to attest on internal controls. Initially auditors had to not only attest on the efficacy of controls, but they also had to attest on management's process of determining the efficacy of internal controls. Both of these attestations were required for the first 3-4 years of SOX, however sometime in 2006 the PCAOB (which was created by SOX) decided to drop the requirement to evaluate managements process, which ultimately reduced a good amount of work for the auditors.
Anyway, I know that is long, but felt I'd share my run in with Enron/Andersen/SOX. I do wonder if anyone here was effected by the passage of SOX?
P.S. I go to lunch frequently with a friend that worked for Andersen and was on the Enron account. He was a new staff at the time and spent some time in the Enron document shredding room putting documents into the shredder.
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