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Tuesday, Jan 22, 2002

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Corporate debacles

The Enron `crisis', the worst in US corporate history, has metamorphosed into an Arthur Anderson 'debacle'.

Corporate entities fudging accounts to show better results and fool share-holders and the stock market is nothing to write home about — it has gone on for ages.

But it is a different game altogether when a professional body of auditors is caught colluding. The Chairman of the US Security and Exchanges Commission (SEC) is in a bitter mood, understandably.

The so-called self-regulating mechanisms of the US Association of accountants have failed, not just in Enron's case but some smaller fries as well, over the years.

It is ,therefore, certain that the US Congress will legislate soon after the current spate of enquiries is concluded, to regulate — may be, even over-regulate — and rein in the accounting profession.

The Institute of Chartered Accountants has formulated a strict code of professional ethics for its members but it is not always clear how it goes about the burdensome task of exposing and debarring errant members.

It is time the Institute had a fresh look at the subject as a whole, especially since the Central Bureau of Investigation now wants to take its help in unearthing corporate fraud that is increasing at an alarming rate.

Kangayam R. Rangaswamy

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