As the fallout from Enron continues to mushroom like the cloud of a nuclear blast, corporate executives gathered Monday night to discuss how they can avoid making the same kind of deadly errors made by the Houston energy giant and its auditor, Arthur Andersen.

Wayne Howell’s advice for how the chief financial officers of technology companies can avoid Enron-like gaffes? Be honest, said the chief of staff to U.S. Senator Max Cleland (D) of Georgia. Be ethical. Disclose to your shareholders. Don’t lie, don’t cheat and don’t steal.

Good enough. But what else should technology company leaders take from Enron’s fall from grace last fall into the largest bankruptcy in U.S. history after acknowledging it had overstated earnings by more than $600 million over the previous four years? And what can be learned from Arthur Andersen, the accounting firm that signed off on Enron’s books, that is following close behind its former client? The U.S. Department of Justice indicted Andersen for obstruction of justice and the once proud firm is now losing clients by the week.

How can businesses and government keep a collapse like Enron’s from happening again, the audience asked.

Howell was quick to mention that more regulation is not necessarily the answer – at least on the securities side of the matter. The government needs to be more active in enforcing the laws it already has, he said.

Howell was one of four panelists at a Monday night discussion of the impact of Enron and Arthur Andersen on those who run technology companies. The panel was part of the CFO Forum’s Technology Executives Roundtable meeting. John Yates, chair of Morris, Manning & Martin’s technology group, moderated the panel. The other speakers were Roger Franklin, chief financial officer, National Linen Service and president of the Atlanta chapter of Financial Executives International; Ross Albert, former general counsel at the U.S. Securities and Exchange Commission, now of counsel with Morris, Manning & Martin; and Benn Konsynski, a professor at Emory University’s Goizueta Business School.

Konsynski’s students would agree. He said they don’t think Enron’s collapse was caused by a lack of rules, but by a lack of principle.

“This is not a systemic problem of control systems in the market but a systemic perception – left over from the dot com era – that no rules need apply,” Konsynski said.

The lessons and solutions expressed ranged from the simple – a CEO placing too much confidence in a CFO – to the complex: dense and myriad special purpose financing vehicles that made it hard for board members, let alone investors, to follow the money.

Remember the shareholders

But complex financing structures are not necessarily bad, Konsynski said. A lack of healthy skepticism and pointed question from a board’s audit committee is, however.

“The complexity itself is not culpable,” he said. “But the lack of purposeful complexity and challenging the need for it is.”

Konsynski said members of boards of directors and audit committees should remember that they are serving as the representatives of the shareholders.

“First and foremost, they are shareholders agent,” he said. “Feel emboldened to ask questions boldly and publicly.”

The audit committee should be made up of independent directors, those not employed by the company, Albert said. Audit committee members should have financial training and enough knowledge to ask real questions of management and the auditors, he said.

Save that, Franklin said audit committee members would do well by asking one simple question of its management team: Is there anything I should know that would cause me either to buy the stock or sell the stock that I cannot tell from reading the financial statement?

Outside relationships too cozy?

One of the bigger issues was the complex relationships between Enron and its outside counsel, including lawyers and accountants.

“The principal duty of a lawyer is to tell his client when he’s about to walk off a cliff,” Albert said. “Apparently the outside counsel in this case was hesitant to do that.”

The changing nature of the relationship between accountants and customers is partly to blame as well, Franklin said. Accounting firms see auditing as a commodity product and try to grow their business by selling other services. In some cases, the desire for more business can blur the line between watchdog and advocate, he said.

“The thing that keeps auditors awake at night is: is my client telling me everything?” Franklin said. “In this case, the auditors got way too comfortable.”