The Enron debacle has stimulated scrutiny of accounting
firms and their practices. The heat is on Andersen, of course, but
clients are challenging the other major firms as well. Corporate
leaders want assurance that their accounting firms are honest, have
trained their people well, and emphasize ethics. Senior executives
at clients and accounting firms are asking a lot of serious questions,
checking policies and procedures very carefully.
As Andersen clients look for other firms to conduct
their audits, competition among large accounting firms will intensify.
Companies using smaller firms will also consider changing, if their
due diligence produces any discomfort at all. The confidence factor
will be a very high concern, including both performance and ethical
issues. Competition will drive down fees, until the market settles
There is a natural connection in people's minds
between accounting and consulting. This relationship is understandable,
since many accounting firms also offer consulting services of one
kind or another.
Corporate executives and boards of directors need
advisors they can trust. They will look more carefully at their
consultants, attorneys, engineers, insurance agents, and other advisors.
In each of these professions, those providers with certifications,
special credentials, or other advantages that strengthen their reputations
and credibility will stand tall. There will be a lot of questions
from nervous clients and prospects.
The professional organizations that monitor and
support the activities and recognition of these service providers,
particularly those conferring accreditations, will be looking more
carefully at the applications and the character of the individuals
and organizations seeking their blessings. We forecast that they
will put more muscle behind their screening procedures, recognizing
that the reputation of the conferring body is also on the line.
Expect ethics committees in these organizations to be more discriminating.
We are already hearing about professional societies
taking extra steps. As an example, the Institute of Management Consultants
is stepping up its public relations program to help corporate leaders
understand what's behind the Certified Management Consultant designation.
The effort, understandably, is led by the United States group, but
sister organizations in 30 countries are also affected by this global