If history teaches one thing, it’s that people rarely learn anything from history.

How else can you explain the existence of a corporate list that appears to be currently circulating among some sell-side analysts in New York and London? According to sources, the common denominator of the companies on the list: All employ CFOs who have close ties to Big Five accounting firms.

That’s right, a kind of blacklist of Big Five-trained CFOs. The possibility that such a list exists conjures Kinescope memories of the witch hunts conducted by the House Un-American Activities Committee — and Sen. Joseph McCarthy. And while CFO.com was not able to obtain a copy of the list, several sources vouch for it existence. They also say the same sell-side analysts are also circulating a list of companies that engage in numerous off-balance-sheet transactions.

If Enron Corp. weren’t in Chapter 11, it would no doubt be on both lists. In fact, Barry Bregman, managing partner of search firm Heindrick & Struggles’s CFO practice, believes the finance chief blacklist is a “knee-jerk” reaction to the spectacular demise of the giant Houston trading company.

Indeed, following the collapse of Enron in October, the reputation of Enron’s auditor, Arthur Andersen, took a beating — particularly since so many finance staffers at Enron came from Andersen, including former chief accounting officer Richard Causey.

Other less-than-inspiring audits by Andersen — most recently at the Arizona Baptist Foundation — have not helped to restore AA’s good name in the eyes of the public.

And given the recent parade of corporate restatements, shareholder lawsuits, and missed earnings, the taint from “Accountinggate” may well be spreading to other Big Five accountancies (Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers). In fact Barry Honig, president of executive search firm Riskon Inc., says finance staff candidates with strong Big Five ties can expect heightened scrutiny during interviews.

Such scapegoating of the Big Five accounting firms does not sit well with James Drury. Drury, principal of executive search firm James Drury Partners, is outraged that top accountancies are being blamed for aggressive corporate bookkeeping. By Drury’s lights, senior management teams and Wall Street — and their fixation on quarterly earnings — are behind the creative accounting employed by some companies.

To Drury, the idea of heaping abuse on auditing firms in general seems ludicrous. “It’s hard to imagine,” he says, “that a blacklist of Big Five-trained executives would taint career searches.”

Farm Team

It would shorten the list of candidates for finance jobs, that’s for sure. Thousands — if not tens of thousands — of corporate finance executives cut their teeth at Big Five accounting firms.

Many CFOs, in fact, view audit firms as a sort of development system — farm teams, if you will — for the finance function. But if CEOs come to believe that sell-side analysts may lower their ratings on companies employing Big-Five trained CFOs, such a development system will likely be shot.

So far, that has not happened. Heidrick & Struggles’s Bregman says that, from what he can tell, CEOs and board members still value Big Five training and experience.

Other executive recruitment specialists seem to back that up. Eric Archer, president of Spherion Professional Recruiting Group, asserts that accountants from Big Five firms are talented people with a good skill sets — and therefore remain attractive hires.

He does expect that former Enron and Andersen employees will have to live with a short-term career bump, however. But he doesn’t believe prospective employers will discount salary offers to ex-Arthur Andersen auditors — despite the steady stream of former Andersen partners and staffers now flooding the market.

The Auditors and the Audited

If some headhunters say they haven’t noticed a dramatic change in the types of CFOs getting hired since Enron’s collapse, they do report some shifts in hiring practices.

According to Archer, a number of companies are now shying away from hiring finance executives directly from their independent audit teams. As CFO.com reported in “When Accountants Switch Sides,” some critics and lawmakers believe such a practice creates an overly cozy relationship between finance staff employees and external accountants. In some cases, they say it can lead to shoddy financial oversight — or worse, fraud.

Eliminating possible conflicts of interest between auditors and audited won’t be easy. Sherlyn Farrell, CEO at RGL Forensic Accountants and Consultants, thinks mandatory rotation of independent auditors could go a long way to erase the perception of impropriety between auditing firms and clients.

But Farrell concedes that a constant switching of auditors will mean more work for finance departments. Why? Because they’ll have to slog through a learning curve with a new auditor every few years, explains Farrell.

And while most executive recruiters are put off by the idea of a Big Five blacklist, some do see the value of a list identifying companies with numerous off-balance sheet transactions. In fact, they say a finance chief who has set up or managed special purpose entities for a current employer may find it tougher lining up a future employer.

“I’d be cautious if a CFO candidate came from a main-line business that engaged in complicated financials,” warns Drury. “Company officers and board members are more likely to debate how vulnerable the company becomes by hiring that kind of candidate.”

Crib Sheet Required?

Robert Denney agrees. “Off-balance-sheet transactions would definitely send up a red flag for me,” says Denny, a long-time corporate board member and principal of marketing consultancy Robert Denney Associates. He says asking management the “nasty questions” is part of the board’s due diligence responsibility.

Many of those questions, he says, are aimed at top finance executives. Denney thinks senior finance managers should know more about a company than the company CEO. “The corporate finance team should know where every dollar of income comes from,” he states, “and where every dollar of expense goes.”

Moreover, Denney insists CFOs better have an economic rationale for removing assets from the balance sheet.

In fact, one audit firm practice leader told CFO.com privately that he is more concerned analysts have put together a list of companies with off-balance transactions than a list of CFOs with Big Five pedigrees. The purported list — essentially, a collection of companies with complicated financial statements — is said to include basic metrics that analysts can check off when analyzing publicly traded businesses.

Asks the practice leader, “Does the investment community really need a crib sheet to remind them that they must look into the fundamentals of corporate finance?”