Thanks for nothing, Enron
Category: Economy & Business...
Posted Wednesday, December 29, 2004 at 04:25 PM [GMT-6]

The week between Christmas and New Year's Day is usual non-stop partying for MLB and me. [OK, those of you who know us can stop your hysterical laughter now.] She usually takes the last of her vacation and we just hang out, sleeping late, catching the movies we've missed during the pre-Christmas distractions, watching lousy-but-somehow-riveting movies on the Sci-Fi Channel and the new DVDs we got for Christmas. But this year's different, thanks to those bums at Enron. OK, let me explain.

One of the government's knee-jerk reactions to the Enron scandal was to create legislation known as The Sarbanes-Oxley Act of 2002. Sarbanes-Oxley or "SOX," as the in-crowd calls it, is intended to make sure that nobody makes off with another corporate cookie-jar, or if they do, that many, many employees of said corporation will be extremely rueful. It imposes direct and personal responsibility for the accuracy of corporate accounting reports on CEOs, CFOs, boards, etc., along with some prickly punishments for violations of fairly vague and broad rules.

SOX established the ground rules, and like good Pharisees, corporate controllers and CFOs everywhere started adding layers of protection in the form of increased internal policies and procedures. I suppose the theory is that if an acceptable arms-length transaction is conducted at 100 paces, then 200 paces is even better...even if some arms get stretched beyond the breaking point.

One of these added layers of protection (I'll resist the urge to use any, um, personal protection metaphors) is the concept of ensuring that one's accounting staff is credentialed to the hilt. Again, the theory is that someone with enough initials following their name will not engage in any unethical, let alone illegal behavior. I'm not sure about the basis for this theory, as one couldn't swing a dead cat in a courtroom without hitting an Enron MBA, but that's apparently an inconvenient fact.

As a result, you've got corporate accountants all over the country being required to accumulate additional training, certification and education, regardless of their level of experience...and MLB is dealing with that situation. She's spending this week studying for the Certified Management Accountant exam. The CMA is similar to the more familiar CPA; the CMA is more relevant for corporate accounting types, while the CPA is geared a bit more toward auditors and tax accountants.

MLB has been advised of the importance to her career of getting a CMA certificate despite a couple of decades of accounting experience, an MBA (well, an MS in Accounting, which is actually more relevant for SOX purposes as it's more focused) and an Accredited Petroleum Accountant certificate. She's not the only one, of course, and there's certainly nothing inherently wrong with continuing education. We all can benefit from it. It's just terribly inconvenient, schedule-wise, and the flawed logic behind the requirement doesn't help things.

If an accountant is ethically-challenged to begin with, no accumulation of credentialing initials is going to help that situation. In fact, one could argue that it might serve to make them more creative in their ability to concoct Enron-like schemes. I suppose the hope is that there will be enough ethical and competent folks (like MLB) around that any such scheme will never get off the ground.

In any event, she'll take the exam tomorrow morning and we'll be able to get back to our regularly scheduled programming...until the next SOX requirement comes down the pike.