Sunday, March 31, 2002

Enron's impact on HMEs
Q.What do Enron and Arthur Anderson have to do with me?

A. From afar, it would not seem to have much affect on the HME market or, for that matter, most companies outside the energy production and trading industry or the accounting profession, but it probably will.

Congress is asking Arthur Anderson executives and many others in the accounting profession what responsibilities accountants have to clients, stockholders and creditors. Are there conflicts of interest in accounting firms as it relates to auditing and consulting and other services provided by many full service accounting firms? It's likely that the cross selling of services by accounting firms will be curtailed by Congress and new standards of professionalism will be established.

The allegations that Enron didn't fully disclose its relationships with related partnerships and that it may be responsible for certain liabilities that it didn't disclose on its financial statements, has already caused changes in the presentation and amount of detailed information contained in financial statements. It's likely that companies will be required to provide more detailed information to their shareholders and creditors.

So now you have to wonder how the accountants' increased cost of liability insurance will be passed on to the consumer. Maybe you will have to hire a new accounting firm or consulting company because you may not be able to use the same firm for both services. Will the cost of selling or leasing your products increase due to changes in the public debt markets or increased costs of disclosure by financial institutions? Change is certain, the costs of change are uncertain, and it certainly could affect you.
Tom Carden is v.p. of sales and marketing at Healthcare Business Credit Corp. Reach him at 800-952-0245.