Andersen Accountants Facing Disciplinary Actions

The Texas State Board of Public Accountancy has filed a complaint against seven former Arthur Andersen accountants who were involved in audit operations for Enron and its subsidiaries. The Houston Chronicle reports that they failed to adequately examine and report financial events leading to Enron’s implosion according to the filed complaint. The complaint was filed with the State Office of Administrative Hearings.

The complaint reads that the seven accountants audited a portion of Enron’s 1997 financial statements and allegedly did not follow proper accounting procedures that specified they consolidate the statements of the two subsidiaries named for Star Wars characters, Chewco and Jedi. After notification by the Securities and Exchange Commission, these statements were changed by Enron according to the Houston Chronicle.

The Houston Chronicle reports that actions leading from the complaint include suspension or revocation of their state accounting licenses. Arthur Andersen’s accounting license was revoked in 2002. The seven accountants may also receive fines of $1000 for each violation alleged in the complaint according to the Associated Press. There has been no date specified for their hearing.