Remember how utterly chaotic that time was? News that shook CPAs to the core surfaced almost daily,
and the next day brought even worse news. I mean, look at the timeline:
- Dec. 2, 2001: Enron files for the largest-ever U.S. bankruptcy.
- Dec. 3, 2001: About 4,000 Enron employees are laid off in Houston.
- Jan. 9, 2002: The Justice Department opens a criminal investigation into the Enron affair.
- Jan. 10, 2002: Enron auditor Arthur Andersen confirms that it shredded Enron documents.
- Jan. 15, 2002: David Duncan, managing partner of Andersen's Enron engagement team, is fired for his role in the shredding. He is eventually charged with obstruction of justice.
- Jan. 17, 2002: Enron fires Arthur Andersen as its auditor.
- June 15, 2002: Arthur Andersen is convicted of obstruction of justice for the shredding of Enron documents.
- July 21, 2002: WorldCom files for bankruptcy, in the process surpassing Enron as the largest-ever U.S. bankruptcy.
- July 31, 2002: The Sarbanes-Oxley Act is enacted.
- Aug. 31, 2002: Arthur Andersen gives up its CPA licenses and surrenders its right to practice before the SEC, effectively putting the Big 5 firm out of business.
In just nine months, the business and accounting worlds were turned upside down.
The years that followed have been dotted with all of the requisite legal proceedings. Former Enron CEOs Jeffrey Skilling and Ken Lay were indicted in 2004 and found guilty in 2006. Before he was sentenced, Lay died of a heart attack on July 5, 2006. Former Enron CFO Andrew Fastow made a deal with prosecutors and went to jail in 2004. In 2011 he was released to in-home detention in the same home — valued at nearly $1 million — where he lived before Enron's fall from grace. His prison sentence will officially end on Dec. 17.
Meanwhile, Enron shareholders lost nearly $11 billion as a result of the collapse. With much of their life savings tied up in company stock, many Enron employees left the company with nothing.
Other scandals have come and gone. By the end of 2002, the bankruptcies of WorldCom ($103.9 billion) and Enron ($65.5 billion) were the largest in U.S. history. Today, they've been dwarfed by the 2008-09 credit crunch bankruptcies of companies like CIT Group, General Motors, Washington Mutual and Lehman Brothers.
Enron is the one we remember, though, isn't it? It gave us notorious villains (Lay, Skilling), memorable heroes (whistleblower Sherron Watkins), personal tragedy, political intrigue and, for CPAs, migraine after debilitating migraine.
You could argue that the profession is better off because of it. We took our lumps, rolled with the punches, and emerged on the far side stronger and more trustworthy than ever. “That which doesn't kill you,” etc., etc.
Still, I'm not in any rush to go through something like that again. Are you? Let's just reminisce every 10 years or so and call it good. Deal?
On second thought, let's just forget I brought it up.