February 16, 2004
Deloitte CEO Has Déjà Vu
History Repeats Itself with Unfortunate Accuracy
in Accounting Industry, Quigley Says
By Amy Corenblith
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Austin—In 1987, while many college students were sporting big
hair and attending Motley Crue concerts, some students at The
University of Texas at Austin were listening to another kind of
MC—Michael Cook, chief executive officer of Deloitte & Touche
LLP, who spoke to students about ethics and integrity in
accounting. Cook’s presentation coincided with the colossal
stock market meltdown in October of that year, as allegations of
insider trading shook investor confidence and the Dow Jones’s
value suddenly plummeted.
Rudy Giuliani, a hotshot prosecutor at the time, made some very
high profile arrests and members of the public were angry,
calling for reforms. In response, the accounting industry
created new codes of conduct and new auditing standards.
“Sounds chillingly familiar, doesn’t it,” asked Jim Quigley,
chief executive officer of Deloitte in 2004, speaking to
students on Feb. 12 as part of the VIP Distinguished Lecture
Series. “It was interesting for me to look back at Mike Cook’s
1987 speech on ethics and integrity and compare that to where we
are today.”
The industry still has a ways to go, Quigley said. “Fast forward
to 2000. We remember what happened that year, the dot.com bubble
bursting. The search began, looking for someone to blame,
because we could not blame ourselves. Executives of Enron and
WorldCom were vilified and investor confidence ruined.”
“It tarnished the reputation of our profession,” he said.
“Investors lost confidence and didn’t want to play the game
anymore.”
The accounting profession is still paying for those oversights,
he said, and will depend on today’s students to uphold the
highest ethical standards possible in order to recover from the
damage done three years ago. By committing themselves to living
ethically and living with integrity, the accounting industry
will be able to see sustained long-term success.
Much has changed, Quigley admitted, but the concerns that the
former Deloitte CEO expressed in 1987 are still valid today.
“Fast forward 20 years,” he said. “Will the CEO of Deloitte be
speaking to UT students about ethics? I hope not.”
Notable Soundbites
On the Sarbanes-Oxley Act
“We were given Sarbanes-Oxley by senators who went home and saw their
constituents upset. We needed an important and strong catalyst and that was it.
There were fixes that needed to be made to the system. This was an enormous cost
being imposed in order for us to regain confidence and rebuild trust.”
“Companies need to change the own behavior in their own companies.
Sarbanes-Oxley has allowed us to make progress. Sarbanes-Oxley is having an
impact on how business is done. It is helping with the transparency of the
company. The number of audit committees is up by 50 percent. They’re better
trained and they’re asking better questions.”
On Deloitte’s high school ethics program
“I hope we’re getting a clear message sent that it is never OK to act
unethically.”
On the importance of ethics in business
“At Deloitte, we’ve worked hard to create a culture that’s based on ethics and
integrity. We have a 1-800 ethics number if they see someone who has crossed the
line. We have resigned from more clients than we’ve obtained. We have fewer
public clients today than we had a year ago because we’re not willing to
associate with some of these companies that don’t meet our standards.”
“Temptations will always be with us. We can restore trust and confidence one
impression at a time, and we should start with ourselves. If your moral compass
doesn’t give you a clear answer, consult with someone else. Maybe it’s as simple
as, ‘Do the right thing, and do it the right way.’ Then this business decade
won’t be defined as a period of greed, entitlement and rationalization but it
will be a decade that is defined by ethics and integrity. Not only will that be
good for business, but that will be good for you.”
“I believe very, very strongly that each one of us has a responsibility to look
in the mirror and say that we’re going to live ethically and live with
integrity. That is the only way for sustained long-term success. That commitment
to ethics and integrity is having the confidence in ourselves that we can get
that done. You can accomplish your career objectives. Without those, however, we
are close to hopeless. We are making progress, but we have much to be done.”
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