What has been the impact of the Enron collapse so far?
Boatsman: There are several important outcomes from the various accounting “scandals.” One is an increase in SEC funding. The staff of the Division of Enforcement has essentially doubled. Another is a change in the accounting rules that would now eliminate the incentive to engage in at least some of the kinds of partnership arrangements Enron used to “manufacture” profits and keep debt off its balance sheet. A third is a general escalation of attention to structured transactions. A structured transaction is one designed the way it is solely to produce a desired accounting portrayal. In a recent speech, the former SEC chief accountant announced that the policy will be to require restatements every time a structured transaction is detected. Past restatements have resulted in significant market price penalties. When the restatement is accompanied by an SEC enforcement action, the market price penalties have been particularly severe. Cannella: Thus far, I would say that Sarbanes-Oxley is p
