AICPA takes enforcement seriously.

As the various investigations into the collapse of Enron move forward, many members are asking what steps the Institute is taking to discipline those who may have violated its Code of Professional Conduct. After all, every member, regardless of place of employment, must adhere to strict ethical requirements and comply with the accounting and auditing standards promulgated by the various regulatory bodies. Violation of the code can result in sanctions ranging from remedial coursework to expulsion from the Institute.

We should be very cautious about painting a broad brush that would condemn the innocent employees of Andersen and Enron along with those who violated our profession's code of conduct in connection with the Enron matter.

That said, the AICPA is actively engaged in investigating the conduct of members who were involved in the collapse of Enron. In order to protect innocent members, however, the fact that an investigation is under way is kept confidential unless and until a member is disciplined for a violation of the Institute's professional standards.

Quality Control Inquiry, Professional Ethics

As you may know, member firms of the SEC Practice Section are required to report to the Quality Control Inquiry Committee (QCIC) all litigation alleging deficiencies in the conduct of an audit of an SEC client. Andersen is a member of the SEC Practice Section and has always met its professional responsibility of complying with this requirement. When a matter is referred to the QCIC, it immediately performs a review to determine the need for corrective action.

Since its establishment in 1979, the QCIC has conducted hundreds of investigations and has instructed many SEC Practice Section member firms to take specific measures to improve their quality control processes. In some cases it has imposed sanctions, while other times it has made recommendations for changes in generally accepted auditing and accounting standards.

If appropriate, the QCIC will refer a matter to the AICPA's Professional Ethics Division, which is responsible for investigating all allegations of misconduct by individual members. The Ethics Division identifies those individuals from both the company and its auditor who are members of the Institute and therefore subject to investigation. As more facts ate revealed about a particular matter, the number of individuals subject to investigation may increase or decrease. The AICPA takes ethics violations very seriously, and will...