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I am an Andersen alumnus so I had more than a casual interest in the demise of the company. Many of my friends suffered severe financial setbacks as a result of Andersen's collapse. That being said, I am not sure whether KPMG faced the same sanctions from the SEC as Andersen since the indictment of KPMG would have centered around the promotion of abusive tax shelters while Andersen's indictment was directed at its audit practices. Andersen's audit practice had already been sanctioned by the SEC, and it had consented to losing its ability to audit publicly traded companies if indicted.

I recognize the coercive ability the government has, and the justified fears of KPMG. However, I also know enough about tax shelters to retain some skepticism about KPMG's conduct in the matter.

That being said, I am not sure whether KPMG faced the same sanctions from the SEC as Andersen since the indictment of KPMG would have centered around the promotion of abusive tax shelters while Andersen's indictment was directed at its audit practices.

Although it is true that the SEC issued a statement yesterday that the KPMG settlement was no concern of theirs, the problem is that a firm's license to practice under state CPA statutes can be lifted for "knowingly participating in the preparation of a false or misleading . . . tax return." If a state revoked the practice license, then the firm would be automatically disqualified from SEC audits because SEC regulations require that the auditor be duly licensed by the state.

Moreover, criminal indictment of a CPA firm creates little incentive for clients to stick around to see how it comes out and prevents potential new clients from even considering engaging the firm.

Andersen's failure was caused by clients bolting for the exits well before the legal ramifications of the indictment affected their practice rights.

Andersen's audit practice had already been sanctioned by the SEC, and it had consented to losing its ability to audit publicly traded companies if indicted.

If your facts are correct (and I have no reason to doubt them), this is further evidence of a coercive government. So-called "consent" agreements are far from freely "consented" to, but are extorted at gunpoint. To include a provision in a "consent agreement" that indictment -- which is a mere unproven allegation, after all -- would automatically terminate a firm's practice rights before the SEC is a travesty of justice.

The bill of rights was intended to protect individuals from an otherwise all-powerful government. Our government has unilaterally abrogated these protections, and we are suckers if we do not protest.