I own stock in a corporation that has very recently changed
accountants, the explanation being that the original accountants tried
to double their fees from the previous year. The accountants'
explanation is that this post-Enron environment forces them to do much
additional work.

On the one hand, I am hearing changing accountants is a very bad sign
because it means something is wrong. In this age of the Enron
scandals, one perception is that changing accountants probably signals
trouble in the company.

On the other hand, I am hearing that accountant changes are not at all
unusual and without evidence to the contrary, a change in accountants
should not be perceived as a sign of wrong doing by the company.

Can you find convincing evidence to support either position? I am
looking for a strong consensus that supports either side
of this question.

Thanks --- Skippy

Hi, Skippy

It's true that Accountants are always jacking up their fees; and it's
also true that a change of Accountants can be a signal that they have
found something with which they fundamentally disagreed.

Unfortunately, there's no way of telling without, AT LEAST, a good
look at the published accounts.

One thing that is for sure is that you should keep the company under
the microscope.

I hope that you are worrying unnecessarily.

Mike

Mike,

Thanks for the observation. It's true the accountants may have found
something on which there was a fundamental disagreement. But I don't
think so because the accountants were willing to continue for double
the fee of the preceding year. I would think the accountants would
have bailed out if something was wrong.

I want to refine my question slightly by saying it is directed more
toward public perception. Have the Enron scandals poisoned the well to
the point where a change in accountants is now perceived negatively by
most investors or does the investing public have enough sense to
realize that most corporations are honest and change accountants for
legitimate business reasons?

Put it this way, my concern is more about the short-term impact on
stock prices rather than what is going on behind the scenes, which may
take a lot longer to uncover.

Thanks again for your comment.

Skip

Skip

I am sure that you are right. If the existing accountants were
prepared to continue then that says it all.

How the investing public would react to the news would, I guess,
depend on how well the Corporation is handling its PR.

As the event has already occurred, you may be able to assess this for
yourself (although there might be other factors that confound the
issue.)

At the end of the day, Investor Confidence is a very fragile thing and
it can be rocked by all kind of events.

It's very difficult to be decisive on this but maybe a Researcher can
turn up some stuff for you.

I shall be interested in anything that comes your way.

Mike

Even with a lot more details a strong concensis is unlikely. Mostly
the public pays no attention. Average share owners skim the annual
financial reports as they lack the skill to interpert the finaces.
Most reports are vauge generalities of little value to anyone other
than the accountants. Accountants could double their fees every year
if the board was afraid to fire them for fear of bad public
perception. Some acountants do a good honest, ethical job. Others are
theives, liers and leaches.  Neil