erious abuse of lled“ special purpose entities” arguably a strained and illogical application of disclosure r ules. This is the changing face of fraud. Fraud now is oft en accomplished co-opting the watchdog, whether an indepen dent auditor, whose judgment is clouded by profits from cons ulting engagements, or a government agency (think meat inspec tors) that can be rendered ineffective by political pressure. One might argue that when auditors can profit by helping th eir client skirt the rules, the public interest is not prot ected. We will hear a lot of that as one result of the e nron mess. Does that mean self-regulation does not work? Har dly! But self-regulation must be free from political influenc e and any standard setting body must have a majority of no n-CPA members dedicated to protecting the public interest by adopting clear disclosure rules, by prohibiting certain kind s of work by a company's auditors, and perhaps requiring auditor rotation. An auditor is much more likely t o retain objectivity, and avoid cronyism, if he or she know s that his work will be available to another firm within a year or two, and no amount of client pleasing rule twist ng can change the rotation. Another useful restriction would be to prohibit an auditor from accepting employment with a n audit client for a period of time after terminating emplo yment with the auditing firm. The CPa profession must respond quickly and effectively to d eal with the Enron scandal, but more importantly, to take c ontrol of the self-regulation process and restore public conf i denceerious abuse of so called “special purpose entities” - - arguably a strained and illogical application of disclosure r ules. This is the changing face of fraud. Fraud now is oft en accomplished by co-opting the watchdog, whether an indepen dent auditor, whose judgment is clouded by profits from cons ulting engagements, or a government agency (think meat inspec tors) that can be rendered ineffective by political pressure. One might argue that when auditors can profit by helping th eir client skirt the rules, the public interest is not prot ected. We will hear a lot of that as one result of the E nron mess. Does that mean self-regulation does not work? Har dly! But self-regulation must be free from political influenc e and any standard setting body must have a majority of no n-CPA members dedicated to protecting the public interest by adopting clear disclosure rules, by prohibiting certain kind s of work by a company’s auditors, and – perhaps – by requiring auditor rotation. An auditor is much more likely t o retain objectivity, and avoid cronyism, if he or she know s that his work will be available to another firm within a year or two, and no amount of client pleasing rule twisti ng can change the rotation. Another useful restriction would be to prohibit an auditor from accepting employment with a n audit client for a period of time after terminating emplo yment with the auditing firm. The CPA profession must respond quickly and effectively to d eal with the Enron scandal, but more importantly, to take c ontrol of the self-regulation process and restore public conf idence