On Friday, August 16, the Texas Board of Accountancy revoked Arthur Andersen LLP's license to practice accounting in the state. The Board used the accounting firm's June 15 guilty verdict on federal obstruction of justice charges as the reason for its unanimous decision to issue the revocation.
The Texas Board has been conducting an investigation of Andersen since last November after the announcement that Enron's financial statements would be restated. "Although it is tragic that a firm with Andersen's proud history in Texas should be brought so low, the firm's actions in the Enron case clearly warrant this result," said K. Michael Conoway, the presiding officer of the Texas board.
The removal of Andersen's license to practice is wholly a formality at this point as the firm has already ceased practicing accounting in Texas and other states as well. Andersen has already announced plans to stop providing audit services nationwide.
Richard Forrest, Andersen's attorney who represented the firm before the board, made the understatement that since the firm's grand jury indictment, "things have of course gone badly from a business standpoint for Arthur Andersen and they have lost a lot of clients." Andersen lost most of its major clients during the spring months while the firm was battling the obstruction of justice charges.
Andersen has also been fined $1,000 by the Texas Board of Public Accountancy, the maximum fine in relation to this situation.
The order of the Texas Board of Accountancy is brief and to the point:
Came on to be considered on August 16, 2002, the Agreed Consent Order in the disciplinary action styled IN RE: ARTHUR ANDERSEN, L.L.P. in Complaint No. 01-11-08L pending before the Texas Board of Public Accountancy (the Board).
Arthur Andersen L.L.P.'s firm license is hereby REVOKED.
Arthur Andersen L.L.P. shall pay the Board the maximum administrative penalty allowed by Section 901.552 of the Act in the amount of $1,000.
After careful consideration of the findings of fact and the conclusions of law in the Agreed Consent Order, the Board hereby RATIFIES and ADOPTS the Agreed Consent Order in all respects. This is the Final Order of the Board in this matter.