By Mary Morley
Derek Lurth is worried.
He is worried because the company he has agreed to work for after college has been rocked by scandal, and may not exist very much longer.
Like many accounting students at BYU, Lurth accepted an offer from the Andersen accounting firm before the company became known for its involvement with Enron.
Andersen is one of the Big 5 accounting firms and used to be a respected name in the business world. Now, the firm must undergo government scrutiny concerning faulty accounting practices that may have contributed to Enron”s bankruptcy – one of the largest bankruptcies ever.
Recently, Andersen was indicted on charges of obstructing justice by shredding tons of documents and deleting computer files related to government audits of Enron.
“I was surprised when I heard about it because they”ve made a good impression on me,” said Lurth, 26, a master”s of accountancy student from Northridge, Calif.
Lurth said he has noticed a lot of damage to Andersen”s image, especially since the indictment, because people associate the name with the scandal.
The injury to the Andersen brand worries Lurth because he agreed to work for Andersen when he thought having the company”s name on his r?sum? would be an asset, and now it seems more like a liability.
“But I”m not about to make any rash decisions,” Lurth said. “I”m won”t jump ship yet.”
Lurth said he has received reassuring phone calls and emails from a leading partner and others in the firm. He said they have been communicating, among other things, that the charges against Andersen are incorrect.
If the courts hold the firm liable, it may be broken up or forced to pay massive fines. For example, last year Andersen paid a $7 million fine to settle charges with the Securities and Exchange Commission that it “knowingly and recklessly” overstated another company”s income by more than $1 billion from 1992 to 1996.
But even if Andersen is not convicted of any of the charges, it may still collapse because the disgrace connected to Enron has lead to Andersen losing many clients.
“There is no doubt the Enron situation has caused grave damage to Andersen”s operation,” said Jay Irvine, placement coordinator for the Marriott School of Management. “Whether or not it can survive the damage and be able to continue as one of the country”s leading public accounting firms is the critical issue confronting Andersen at the moment.
“The firm definitely has a huge uphill battle on its hands,” he said
Luckily, BYU accounting students who have signed with Andersen have a few advantages in their favor.
First, if the company does fail, most of its employees should be able to find work elsewhere – either in private industry or with other public accounting firms which most likely would gain the accounts lost by Andersen, said Irvine.
Second, BYU accounting students generally have an easy time getting jobs, according to Ned Hill, dean of the Marriott School of Management.
“By and large, accounting students at BYU are in high demand,” he said. “They”re very easy to place – that gives them a lot security.”
Students who have accepted offers from Andersen may be wondering how binding their agreements are. When the economy was slumping last year, some companies withdrew offers they had made to graduating students or gave them a bonus for deferring their employment.
Andersen has stated in conference calls to BYU that they will not withdraw any offers they have made to BYU students, Hill said.
While it is generally considered “very bad manners” for a prospective employee to break such an agreement, Hill said he thought the firm might be more understanding than usual because things have changed so dramatically.
Current protocol could not be directly confirmed with Andersen as phone calls to the company were not immediately returned.
Lurth said he plans to stay abreast of the issue, as well as his options. He said he would not back out of his agreement unless he had solid offer from another company, and even then he would have to closely consider the decision.