It has been my experience that accountants frequently come with an altruistic ego that results in a confidence of being right even if they are wrong. Today I read an article reporting on the court case with Paul Manafort and the alleged fraud he committed. Specifically, this article focused on testimony from the accountant who was a protected witness (meaning that she was never to be prosecuted for the potential wrongdoings that she performed). She filed tax returns for 20 years and frequently questioned international loans that were flipped between revenues and loans depending on the tax position. Knowingly she prepared fraudulent returns and manipulated taxable income.
A portion of the article mentioned that she questioned the loans and frequently said that income was being ‘finessed’ to manage the tax position. In my opinion, she knew these transactions were wrong and she still let her employer/client make material adjustments with little or no documentation.
I have been practicing accounting for 19 years. I have always said that that accounting is part science and part art. By nature, I think that accountants are conservative, I am very conservative. I can say, as a matter of fact, ALWAYS DO THE RIGHT THING. For the past 6 years, I have participated in several M&A transactions, my role has to be to provide financial and accounting strength for companies that do not have internal resources to consummate a sell-side transaction. I can say without a doubt that each time an owner/BOD did not want to deal with a problem, it came up in diligence or after the fact during the earn-out. It is much easier to do the right thing versus making false statements.