March 2002

Enron Hits Close to Home

Most of the investigation, discussion, and media coverage of the Enron debacle continues to focus on the national and international implications for the economy and the business world. But the Enron bankruptcy will be remembered in the history of accounting as a dramatic change in state regulation of the profession.

On the national level, the major players include Congress, the SEC, the AICPA, the media, and the business community. Here in New York State, lawmakers in both houses of the state legislature, determined to protect their citizens, have submitted bills whose provisions would directly or indirectly affect state regulation of the practice of public accounting. The State Higher Education Committee heard additional proposals at its public hearings in February. CPAs in New York State need to be aware of these proposals and consider their implications.

Proposals under consideration include the following:

These proposals all have potential good points and bad points that need to be explored and discussed. In the same way that setting term limits for elected officials and limiting campaign contributions can solve the problems they were intended to address while creating new, unforeseen problems, it is important that new legislation be crafted to avoid unintended consequences.

For both our state and the entire professional community, we need to bring our most sound thinking to bear. New York is the epicenter of the financial world and has always been a bellwether state. The outcome of the debate over accounting law and regulation in New York State may well influence the debate in other states and across the nation. Our responsibility for proceeding wisely at this juncture is large. The text of the bills can be viewed online at, in the Enron Center. If you have input on any of these current proposals, or a proposal of your own, write or e-mail me with your thoughts.

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA

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