Did Arthur Andersen Look the Other Way?
The Wall Street Journal reports that, “The case is shaping up as a possible centerpiece of a campaign by the SEC to demonstrate that conflicts of interest can be caused by the proliferation of consulting and other non-auditing services that numerous accounting firms routinely offer.”
Apparently an internal probe into Waste Management a few years back revealed the possibility of accounting that caused the company to have to pay a $3.5 million charge in 1998 and inspired the shareholders to file a suit against Arthur Andersen. The Big Five company agreed to settle for $220 million.
Reportedly, work done between 1991 and 1997 helped Andersen collect $50 million in consulting service fees and $10 million in fees from audit work. The Wall Street Journal reports that the SEC is trying to determine if Andersen auditors “looked the other way to keep consulting fees flowing.”