Conspiracy of Fools
This is off-topic somewhat, but still highly relevant to the CPA exam. I have been reading (actually an audio book) “Conspiracy of Fools” by Kurt Eichenwald, which gives readers an inside view of what exactly happened at Enron.
I’m halfway through the book (I listen to it at work when I have some spreadsheet maintenance or other brainless tasks to do) and even though I already know what happens and I’ve already seen the movie “Enron: The Smartest Guys in the Room“, I’m still shocked that Arthur Andersen and the Board of Directors didn’t stop Jeff Skilling or Andy Fastow from doing what they did.
For the uninitiated into Enron, the things that Enron CFO Andy Fastow did will blow your mind. In the era of Sarbanes-Oxley, it seems like fantasy to think that such a thing could happen, but the book takes you back to pre-Sarbanes where the term “post-Enron” doesn’t yet exist.
In short, Enron used mark-to-market accounting in their dealings which should have been a HUGE no-no. They also formed all sorts of limited partnerships and dumped debt out of Enron’s books in a string of countless transactions that weren’t at arm’s-length.
If you have a chance to pick up the book – it’s great. If you have never seen “Enron: The Smartest Guys in the Room”, you HAVE to watch it as a CPA candidate. It’s very interesting – and very sad (think of the tens of thousands of people who lost their 401(k) and their retirements at Enron).
If you are a Netflix subscriber, you can go online and watch the movie for free. Your local video store should have it too. I’ve seen it three times now and I still find myself baffled that such a thing was allowed to happen each time I watch it.
