Auditing

Community News

Peregrine Files For Bankruptcy, Sues Andersen For $1 Billion

Software company Peregrine Systems Inc., the self-described leading global provider of Infrastructure Management software, filed for Chapter 11 bankruptcy projection over the weekend and announced plans to file a lawsuit naming Arthur Andersen LLP, Arthur Andersen Worldwide, Arthur Andersen Germany, and Andersen audit partner Daniel Stulac and possibly others for not detecting the problems that led to the firm's bankruptcy. Peregrine plans to claim in its lawsuit that Andersen was negligent and engaged in fraud in its audit work for the company's 2000, 2001, and 2002 fiscal years.
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Community News

Insurance Regulators Sue Andersen in Massachusetts

State insurance regulators in Massachusetts have filed suit against Arthur Andersen LLP in an attempt to recover as much as $90 million. The suit stems from Andersen's 1997 audit of Trust Insurance Company, once the ninth largest auto insurance company in Massachusetts.
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Community News

Auditor's E-mail Blunder Raises Internet Policy Issues

A major accounting firm recently got a glimpse into the darker side of the Internet when a young and socially-active auditor in its New York office accidentally sent a very personal e-mail to the wrong recipient. The recipient sent the message to a friend, who sent it to another friend and so on.
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Community News

Teamsters Sued For Using Audits by Thomas Havey

The National Labor Relations Board (NLRB) recently joined in filing class-action federal charges against the International Brotherhood of Teamsters. The suit
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A&A

FASB to Consider Project on International Convergence

On September 18, 2002, the Financial Accounting Standards Board (FASB) met with the International Accounting Standards Board (IASB). There were reports that the meeting ended in a definite commitment to future action. But the truth seems to be that no decisions were reached, except that FASB will consider a project on international convergence.A tentative approach might be a 3-part project to address differences between U.S.
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American Stock Exchange Sets New Reporting Requirements

The American Stock Exchange (Amex) Board of Governors has approved changes in reporting and governance requirements for companies listed on the Exchange.Highlights of the new reporting requirements:Each Amex-listed company must adopt and disclose a code of ethics and compliance program.Each foreign Amex issuer must summarize in its annual proxy statement any material differences between Amex requirements and corporate governance practices followed in its home country.
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SEC Charges Former Tyco Officers With Fraud

The U.S. Securities and Exchange Commission (SEC) has filed fraud charges against three former officers of Tyco International. Due to the nature of some of the violations cited, the enforcement action became known as "a looting case." Other charges include financial reporting violations and lying to the company's auditor, PicewaterhouseCoopers.The former officers named in the complaint are the CEO, CFO and general counsel.
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SEC Narrows Search For Chair of New Oversight Board

The U.S. Securities and Exchange Commission (SEC) has been trying to recruit a chairman for the new accounting oversight board created under the Sarbanes-Oxley Act of 2002. But it hasn't been easy. Yesterday, the Washington Post reported that forerunner Paul Volcker has all but turned down the post.Mr. Volcker has many supporters who believe his reputation would help instill public confidence in the board. In addition to being a former Federal Reserve Chairman, Mr.
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Survey Provides Insight Into CFO-Auditor Relationships

"The ultimate responsibility for financial statements may lie with corporate managers, but by any measure, the audit firms have failed miserably in their role as financial watchdogs." This conclusion is based on results of the second in a series of four surveys on corporate financial practices produced by CFO Magazine.The CFO Survey of Auditor-Client Relationships demonstrates that 38% of auditors challenge the accounting practices of their clients, yet 57% of the clients retaliate by either convincing
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SEC Sues CEO for Falsifying 80% of Company's Revenues

The U.S. Securities and Exchange Commission filed a complaint against the former president, chairman and CEO of HPL Technologies, charging him with fabricating over 80% of the company's reported revenues for fiscal 2002.According to the complaint, the CEO began his fraud in anticipation of HPL's initial public offering in July 2001.
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Community News

Andersen Surrenders Its Licenses to Audit

The day that employees of Andersen never could imagine has arrived. On Saturday August 31, 2002, Andersen LLP, the U.S. firm, surrendered its license to practice in the United States.Read AccountingWEB's two-part report:Good-Bye Andersen: Venerable Giant Will Audit No More: "As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of, its firm permits in all states where it was licensed to practice public accountancy with state regulators," said the former Big Five accounting firm in a statement on Saturday.
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Practice Management

Andersen Surrenders Its Licenses - Its Legacy Lives On

Although it will continue in business, Andersen officially surrendered its state licenses on August 31, 2002 as agreed with the Securities and Exchange Commission. Observers are still trying to sort through the factors that led to the demise of the firm's audit practice and helped shape its legacy to the accounting profession. A special four-part series in the Chicago Tribune describes a series of troublesome trends that developed over the past two decades.
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Community News

Good-Bye Andersen: Venerable Giant Will Audit No More

"As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to revocation of, its firm permits in all states where it was licensed to practice public accountancy with state regulators," said the former Big Five accounting firm in a statement on Saturday.Life as Arthur Andersen accountants knew it began unraveling last January when the firm admitted that members of the firm shredded
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Community News

KPMG to be Named in Fraud Action

KPMG-U.S. has been caught in the net of shareholder lawsuits that will relate to accounting work performed for voice recognition software company Lernout & Hauspie. The company's auditor, KPMG-Belgium, will share defendant status with its U.S. counterpart as the shareholder suits alleging fraud go to trial. It is anticipated that shareholders will band together to file a class action lawsuit alleging that KPMG auditors should have been aware of problems with the software company's accounts.U.S. District Court Judge Patti Saris, who ruled that KPMG-U.S.
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Community News

Andersen Worldwide Faces $350 Million RICO Action

Troubles continue to plague Arthur Andersen Worldwide, the global umbrella company that oversees worldwide operations of the Andersen firms, including Arthur Andersen LLP, U.S. The global firm settled a lawsuit for $60 million earlier this week relating to its role in the botched Enron audit performed by the U.S. firm. Now the worldwide firm is being sued in the U.S.
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E-mails Show How WorldCom Blocked Auditor Communications

A series of WorldCom e-mails released by the House Financial Services Committee confirms that members of WorldCom management were not forthcoming in their discussions with the company's auditors. Some of the e-mails hint at a "cover-up" of the accounting techniques used to improperly manage earnings. One particularly egregious accounting technique involved improper capitalization of $3.8 billion in line costs.
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IFAC Commits to Translating Public Sector Accounting Standards With IASB

Furthering its efforts to improve financial reporting by governments worldwide, the International Accounting Standards Board (IASB) and the Public Sector Committee (PSC) of the International Federation of Accountants (IFAC) will work together to translate the accrual basis International Public Sector Accounting Standards (IPSASs) into languages other than English.
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Grant Thornton Launches Advisory Services to Audit Committees

Grant Thornton has introduced its Independent Advisory Services to Audit Committees, an expansion of the services it offers to public companies. “The events of the past few months clearly reveal the importance of audit committees' responsibility to protect the interests of investors, employees and customers,” says Mendy Kwestel, Grant Thornton partner.
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California Enacts New Laws Affecting Accountants

On August 23, 2002, California Governor Gray Davis signed three bills that affect accountants doing business in the state.
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IIA Chairman Cites Four Challenges For Internal Auditors

The Institute of Internal Auditors Chairman LeRoy E. Bookal has outlined the key challenges confronting internal auditors after the recent round of accounting scandals and legislative reforms. The challenges focus on ways to create a working environment conducive to creating opportunities for internal auditors to add value. For maximum value-added, Mr.
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Pages

Voice of the Editor

Even though any accounting auditor would tell you it seems like there are an awful lot of tax accountants out there, surely one-third of the country isn't made up of tax preparers, so it's rather startling news to learn that one-third of Americans like to do their taxes. Who knew?
Read more
Gail Perry, CPA
Publisher/Editor-in-Chief, AccountingWEB
editor@accountingweb.com
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