Lessons from Enron, for our system (and our profession)?

Public

Last week, Jim Turley, Chief Executive Officer of Ernst & Young, was asked by Charlie Rose:

What are the lessons of Enron, and how did it happen?

His reply:

Well, look, I think that, at the end of the day, you know, the profession wasn't as focused on the delivery of quality as we needed to be, back in the 90s and leading up the the Enron era, and so what happened after was really important.

Ernst and Young, and all of our peers, did everything that they could to scrub every process that could touch quality in the marketplace. How we hire people. How we train them. How we assign them to jobs. The methodologies we use, The technologies we use. How we review technical material. Our compensation systems. How we promote people. So, you name it. You know, the clients we accept, which ones do we want to work for, and which ones don't we want to work for. All of these things got scrubbed in ways that I think, you know, was [sic] overdue, and hadn't been scrubbed in enough time.

I think it's a lesson of complacency. I think we all had fallen complacent in the 90s. Remember, there was the "go go dot com" time, and my guess is that's what happened, and one of the beauties – and one of the benefits – of having a regulator, is you can't get complacent because you're getting inspected regularly, you're being poked and prodded, and we think we would never get complacent ourselves again, but we have regulators and not just here in the United States, around the globe, who help make sure we don't.

The full interview is available here.

Makes me wonder if our own profession ought to be taking the bull more by the horns … ?