Enron Fires Andersen, Begins Search for New Auditor

Failed energy giant Enron announced on Thursday that it has fired Andersen as its auditor, ending a relationship that dates back to mid-80s. Enron's board of directors made the decision, referring to Andersen's accounting advice and recent allegations of Andersen's destruction of thousands of Enron-related documents.

"While we had been willing to give Andersen the benefit of the doubt until the completion of that investigation, we can't afford to wait any longer," said Enron's chairman Kenneth Lay.

Andersen didn't express surprise, stating that the firm's relationship with Enron was already over. "As a matter of fact, our relationship with Enron ended when the company's business failed and it went into bankruptcy," said Patrick Dorton, a spokesman for Andersen. Mr. Dorton went on to say, however, that Andersen remained "committed to continuing to address the issues related to the collapse of Enron in a forthright and candid manner."

House Panel Requests Records After Interviewing Lead Partner on Enron Engagement

On Wednesday, the House Commerce and Energy Committee, which is investigating the Andersen and Enron situation, interviewed David Duncan, the former Andersen lead partner on the Enron engagement who was fired earlier this week. The panel questioned Mr. Duncan about http://energycommerce.house.gov/107/pubs/andersenmemos.pdf " target="_blank">two internal Andersen e-mail memos in which the Enron situation was discussed.

The first memo, dated February 6, 2001 was entitled "Enron retention meeting" and contained notes of a meeting discussing the accounting firm's decision to retain Enron as a client in spite of "significant discussion…regarding the related party transactions with LJM including the materiality of such amounts to Enron's income statement and the amount retained 'off balance sheet.'"

The second memo, dated August 21, 2001, entitled "Client Accounting Inquiry," discussed the conversation between Enron's vice president Sherron Smith Watkins and Andersen's James A. Hecker, in which Ms. Watkins expressed her concerns about the "propriety of accounting for certain related-party transactions" at Enron.

As a result of the discussions regarding these two memos, the Energy and Commerce Committee on Thursday sent a http://energycommerce.house.gov/107/news/01172002_468.htm " target="_blank">letter to Andersen's Managing Partner and CEO Joseph Berardino in which the committee requested that Andersen provide a shopping list of documents relating to meetings and conversations surrounding the events described in these two memos.

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