Former Partner Shares Life Lessons from the Rise and Fall of Arthur Andersen

As Firm Marks 100th Year, Executive Recounts the Rewards
of Working at a Company Known for Integrity

By the time he was 30, Larry Katzen made partner at Arthur Andersen, then one of the “Big 8” accounting firms with a reputation for innovation and integrity.

In the ensuing years, the firm continued to soar in stature. With an emphasis on continuing education for employees and meticulous attention to detail, it was one of the most trusted accounting firms in the industry. Katzen enjoyed a fast-paced rise through the ranks, all the while learning, traveling, and parenting quadruplets with his wife and college sweetheart, Susan.

It all came crashing down in 2002 when the company was indicted based on false accusations having to do with the scandals at Enron. With the firm’s survival in question, Katzen moved quickly to encourage employees to carefully complete all remaining assignments.

“Arthur Andersen became fodder for the government’s prosecution of Enron – although it had no role in Enron’s demise,” says Katzen, author of, “And You Thought Accountants Were Boring – My Life Inside Arthur Andersen,” (Larryrkatzen.com), a unique look inside one of the world’s most historically important accounting firms.

Arthur Andersen was eventually vindicated by a 9-0 Supreme Court ruling. By then, however, the damage had been done, creating chaos in the careers of thousands of employees. Arthur Andersen, which marked its 100th anniversary in September, still exists today, albeit in a different incarnation.
“I will never regret my time at the firm; it provided so much for me, including solid life lessons,” says Katzen, who shares some of those.

• Do the right thing. At the end of Katzen’s career, he had to help his employees find new jobs, which was an arduous process. “It was the right thing to do, which is its own reward, but the right actions also tend to have rewarding consequences,” he says. That lesson had taken root during Katzen’s college years at Drake University, when a trusted professor warned him against his plan to cancel a job interview with Arthur Andersen because he’d already received several promising offers. “If I hadn’t done what was right, if I hadn’t followed through on my commitment, my life would have gone down a very different path,” he says.

• Listen to your heart. Although Arthur Andersen gave him the lowest salary offer, Katzen nonetheless felt it was the right place for him. “My personality seemed to blend with their corporate culture,” he says. “So I turned down higher and more attractive offers and went with my heart.” Listening to his heart also helped during his wife’s fragile pregnancy with their quadruplets; if the couple hadn’t approved using an experimental drug, “we probably would not have any children today,” he says.

• Increases in responsibility come with personal sacrifice. Katzen had to uproot his life and family and move to a strange new town. But the short-term pain enabled the family to attain financial security and a better quality of life. “If you want to grow in an organization, success does not come without personal sacrifice,” he says. “In my case, it resulted in four moves – but it was well worth it.”

• Beware of the power of our government. In his first substantive experience in dealing with the IRS, Katzen quickly learned how coercive and powerful the agency can be. No matter how reasonable you may try to be with a government agency like the IRS, there is no guarantee it will respond in kind – and don’t assume that you will get a fair trial, he says. “They have the power and authority to do whatever they want to do. In less than three months, our government put one of the world’s most effective and profitable international accounting firms out of business.”

About Larry Katzen

Larry Katzen worked at Arthur Andersen from 1967 to 2002, quickly rising through the ranks to become a partner at age 30. His new memoir details the government’s unjust persecution of a company known for maintaining the highest standards.

 

 

Striking a Balance in Dealing With Cost Variances

Work in management or around management and at some point in time or another you are sure to hear the term or terms concerning “Analyzing Cost Variances”.  Just what do these terms mean and what are their great potential implications overall to management, their management and leadership decisions and to the long term health of the company or enterprise?

The term ‘Analyzing ( or analysis) of Cost Variances”  refer to the strategies and analytic workups and conclusions  accountants and accounting bean counter types derive when they  encounter a deferring tally or differences  between what might be called the “real” ( on paper or computer spreadsheet) budgeted costs and actual spent costs. The phrase may well be heard from the mouths of, memos and emails of management and upper management to accounting – I (we / the team) wants and answers to the discrepancies and disappearances between the two values. Further management may demand that they want an answer promptly or at the least within a reasonable enough time period to take good corrective action and actions.  Significant differences of this figure or value (accountants have a habit in their “lingo” of referring to these tallied differences as “variances” in either real dollars terms or more innocuous “figures” as if they are simply chits on the table. Yet to a legitimate and astutely run operation all deferring figures and variances should be identified and targeted promptly for full, complete and comprehensive corrective action. Yet its often more than difficult if not impossible to change a direction or even heading of a ship either putting out good speed , or even direction if a ship of great weight of inertia.

In many companies , firms and organizations themselves , it can be said and clearly noted that accountants , and their associated “accounting departments” , with all the plethora today of computers , great and cheap computer power “in the cloud” along with a host of complex and even cryptic algorithms spend so much time identifying variances  and ensuring that they are allocated to the right , specific and correct accounting time period  that for the most part that they never  really get around to telling and explaining to management – both upper and middle management levels – what these variances really mean or indeed what might of caused them.

It can be said that it can be best and the wisest choice not  to assume that the experts in the accounting dept or the specific accountants involved actually know , have a good fix or perhaps even have the smallest inkling and inklings  of the cause of every variance on their books.

It can be said that a wise and experienced strategy by management is to ask , or even insist , on a plain-language explanation or what caused the variances – or at the least some optional and potential reasons or even suspicions of what did cause these discrepancies or variances.  If the “bean counters” can back it up with actual hard data, at least you will have hard to base your decisions on, rather than flying blind.  Other times it may be an amalgam of potential answers without full supporting data.  Its then up to you and the “management team” or teams to come up with a plan of action and a host of decisions with which to implement these policies , plans and procedures fully.

Kirk B. Stephens

Senior principal Ace Employment Services – Winnipeg’s Manitoba  temp service employment service

 

5 Resources for Entrepreneurs to Learn About Accounting

As an entrepreneur, there are literally a handful of different subjects you must become well-versed in so that you can start, grow and manage your business in an effective manner. Investing the time, energy, and money into learning these various concepts isn’t a hurdle for the entrepreneur who already has their sleeves rolled up with a hunger for success. However, often times the obstacle lies is determining where exactly to begin to study these subjects, and this is particularly the case with accounting.

Here’s a look at 5 different places online that an entrepreneur who needs to learn about accounting shouldn’t miss.

1. AccountingCoach – AccountingCoach.com has received over 9 million visitors and has received more than 1,000 testimonials from different entrepreneurs seeking to learn accounting. Their aim is to provide clear and concise information that will help someone without any background in accounting easily grasp the main concepts at absolutely no cost. Their site is laid out well, with countless essential topics related to accounting. AccountingCoach is highly recommended for entrepreneurs who want to learning accounting quick and easy.

2. The U.S. Small Business Administration – Chances are that as an entrepreneur, you may already be pretty familiar with this website. SBA’s website is loaded with lots of excellent information, tools, and resources for small business owners of all backgrounds. One of the courses they offer which you may not have noticed even if you visit this site frequently is an Introduction to Accounting. You can also search their website for further information and resources on accounting and finance.

3. Bean Counter – Bean Counter is an educational and knowledge-based site with a bit of humor. It offers free accounting and bookkeeping tutorials, lessons, exams, and quizzes to help an entrepreneur get started. They also have a substantial amount useful resources to discover additional material for learning accounting that is mostly free. Be sure not to let the simple design of their website throw you off and make you think that this site doesn’t have much to offer. Spend some time here and you can easily learn a great deal about accounting in a short period of time with some effort.

4. Real Life Accounting – Real Life Accounting is an integrated accounting program designed specifically for people who aren’t accountants. More than 2,000 students from over 30 different countries around the world have benefited from their program. Their site is made up of courses, articles, resources, and questions & answers, with a live instructor available upon request to assist you for a fee if necessary. There are two main paid courses available, and the site is packed with quite a bit of free information if you’re not ready to pay for one of the courses just yet.

5. Tutor2u – Tutor2u is a leading publisher of e-learning resources in several different subjects, with materials in use by over 3,500 schools and colleges in the UK and more than 85 other countries. For entrepreneurs interested in learning accounting and finance, their website features revision presentations, revision notes, and quizzes in dozens of different concepts.

Sit down and spend some quality time browsing through these 5 different resources and you will soon be on your way to mastering accounting before you realize it!

Britney Baker usually writes about getting the best auto insurance comparison over at Auto Insurance Comparison .org.