RSS feeds'An error in judgement.' It reads like the confession of a minor soap star or a footballer caught in flagrante.
But this was no conventional celebrity. The words tumbled from the lips of a Big Five senior partner describing his firm's work for a major client.
But with those four short words, spoken on a cool winter morning in Washington DC, the global accountancy industry was plunged into turmoil.
The US House of Representatives Committee on Financial Services seldom gets as much attention as it did on the morning of December 12. But then it's rare that one of the ten biggest companies in the world's largest economy files for bankruptcy.
As Andersen CEO Joe Berardino waited to testify outside Room 2128 of the Rayburn House Office Building, he must have wrestled with the phrases he would use to defend his firm's audit of Enron, the just-collapsed energy giant. He had every reason to be nervous.
Facing congressmen who clearly smelt blood, Berardino prepared to justify the $47.5m (£32.8m) Enron paid his firm in fees last year alone. He readied himself to respond to questions about why the company was given the green light to access additional capital and increase leverage without adding debt to its balance sheet.
And he braced himself to be told that he - and his firm - should have done more to prevent the seemingly impossible collapse of a company that had $64bn of assets.
Inside the committee room Berardino must have felt he had little room for manoeuvre. And to the alarm of many onlookers, he admitted mistakes had been made.
'There is some explaining to do,' he began calmly. 'I am here today to tell you candidly that this was an error in judgement.'
He then described how Andersen had failed to force the consolidation of a so-called special purpose entity, an off-balance sheet vehicle that disguised the level of debt at Enron.
And he added simply: 'Andersen will not hide from its responsibilities.'
Despite arguing that Enron had withheld information and that Andersen had told the energy giant of possible illegal acts, the damage had already been done. You could almost hear the jaws of senior partners dropping on both sides of the Atlantic.
Within hours of Berardino's testimony, their dismay was complete as the implications for their own firms - in terms of the extent to which auditors are policemen - sank in.
'This is very damaging to the profession,' said one.
Another's dismay clouded his usual tact. 'He has always had a habit of not keeping his mouth shut,' was the cutting verdict.
That assessment will surprise many who have followed Berardino's career.
He was an architect of Andersen's celebrated Global 1000 client base expansion. And his interests outside of the firm - including a raft of directorships and trusteeships with the likes of the Foreign Policy Association, the United States Council for International Business and Fairfield University - suggest qualities of diplomacy, insight and sound judgement.
Last week Berardino had some better news to report. In the most extensive peer review in Andersen's history, Deloittes said the firm's system of accounting and auditing quality has been deemed to provide 'reasonable assurance' of compliance with professional standards.
If that sounds like an organisation being damned with faint praise note that the review was expanded after the Enron scandal exploded.
Berardino's term as Andersen CEO expires in August 2004. Whether he sees it out is far from certain.
- Damian Wild is editor of Accountancy Age.
