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Practice Management

Financial Executives Revise Ethics, Support CARTA

In testimony to the House Financial Services Committee on March 20, 2002, Phil Livingston, president and chief executive officer of Financial Executives International (FEI), said FEI lends its support to H.R. 3763, the Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002 (CARTA). Mr.
Community News

E&Y and PwC Join KPMG in Picking Up Andersen Pieces

Earlier this week the news was that Andersen Worldwide was in negotiations to merge the non-U.S. Andersen practices into KMPG.

Don Kirk To Serve in Temporary Audit Watchdog Role

Donald J. Kirk, former vice chairman of the Public Oversight Board (POB) and former chairman of the Financial Accounting Standards Board, has agreed to oversee the completion of the independence reviews of the Big Five accounting firms after the POB closes its doors on March 31, 2002.

SEC Responds to DOJ Action with Rules, Hotlines

In response to the recent action of the Department of Justice (DOJ) against Arthur Andersen LLP, the Securities and Exchange Commission (SEC) has released guidance, consisting of a package of rules, hotlines and email addresses for use by investors, clients, and other audit firms.

POB Calls for New Independent Institute of Accountancy

At Congressional hearings on March 19, 2002, Charles A. Bowsher, the chairman of the accounting profession's Public Oversight Board (POB), and Aulana Peters, a POB member and former Commissioner of the Securities and Exchange Commission (SEC), asked Congress to create an Independent Institute of Accountancy (IIA). Chairman Bowsher is a former U.S. comptroller general and head of Congress' General Accounting Office.
Community News

Unusual Approach to AA Lands DOJ on Slippery Slope

Defense attorneys who specialize in white collar crime say the Department of Justice (DOJ) chose an unusual approach in indicting Arthur Andersen (AA) without specifying any individual wrongdoing.
Community News

More Andersen Clients Flee; Merger Talks Surface Overseas

Big Five firm Andersen is facing almost daily defections of major clients as publicly held companies jump ship in search of another auditor. The latest defections include pharmaceutical group Wyeth, consumer product-maker Sara Lee Corp., drug and medical-product giant Abbott Laboratories, and recreational products manufacturer Brunswick Corp.Sara Lee paid Andersen nearly $38 million in fees last year, while the other three companies combined paid approximately $30 million in audit and consultancy fees.

D&T's CEO Argues Against Three 'Quick Fix' Reforms

Speaking at the Senate Oversight hearings, James E. Copeland, chief executive officer of Deloitte & Touche, spoke out against three types of audit reform proposals that some lawmakers see as "quick fixes" to perceived problems with the accounting profession.Mandatory rotation of audit firms.
Community News

Andersen Suspended From New Government Contract Work

Following the Justice Department's indictment against Arthur Andersen last Thursday, the United States General Services Administration suspended Andersen from pursuing any new federal government work during the period that the indictment is in place.According to the GSA, indictments for criminal offenses, such as the one handed down to the Andersen accounting firm on Thursday, offers "adequate evidence of misconduct to support suspe
Community News

Auditor Independence: Is This Really The Answer That Will Make It Work?

By Robert G. Epstein, CPA, President and CEO, CareerBank.comIs Auditor Independence really the answer that will make it all work? This is an age-old question of the accounting world, and there are no easy answers. In simpler times, the fear of being publicly humiliated by losing your CPA license and having to sit for the 3-day exam again was enough to keep most CPAs clean. Well, times have certainly changed! With auditor independence and the Enron-Andersen issue dominating industry discussions, that no longer seems to be the case.
Community News

Andersen Indicted on Criminal Charges

The U.S.

FASB Vows to Speed Standards, Keep Process Open

Recent Congressional hearings and legislative initiatives have zeroed in on the importance of increasing the independence of the Financial Accounting Standard Board (FASB) and speeding up its standard-setting process.
Community News

Andersen Merger Talks Fizzle; Firm Refuses Guilty Plea

Merger talks between Big Five firm Andersen and rival firms Ernst & Young and Deloitte Touche Tohmatsu came to an abrupt end on Wednesday when E&Y and Deloitte issued separate statements indicating their rejection of possible plans to combine with Andersen.Both E&Y and Deloitte had met with Andersen to discuss the possibility of somehow absorbing Andersen into their respective practices.

Congress Hears Testimony and Criticism of AICPA

Barry C. Melancon, president and CEO of the American Institute of CPAs (AICPA), was a key witness at the March 13, 2002 hearing on the Corporate and Auditing Accountability, Responsibility, and Transparency Act of 2002 (CARTA).
Community News

Andersen Negotiating Merger; Volcker Announces Changes

Andersen is immersed in heavy negotiations with rival Big Five firms, hoping to reach an agreement to form some sort of business combination by the end of this week. Early reports indicated that talks with Deloitte Touche Tohmatsu were in advanced stages, but all of the other four accounting giants have been speaking with Andersen.
Community News

Do Auditors Pay Too High a Price for Honesty?

The Dallas Morning News did some digging into the reasons why auditors are dismissed. It found that auditors often risk dismissal when they force a company to restate its earnings. And auditors who determine a company probably won't stay in business have an even better chance of being dismissed.
Community News

Andersen Grounded by Delta

Big Five firm Andersen continues adding clients to the loss column with Thursday's announcement that Delta, the third-ranked U.S. air carrier, is dropping Andersen as its auditor after a relationship of 50 years.Deloitte & Touche has been selected as Delta's new independent accountant for 2002 after what the company is calling a "thorough evaluation process" in which four of the five Big Five firms were considered for the job. PricewaterhouseCoopers did not bid on the job.
Community News

Independence Reviews on Hold, Pending New Watchdog

While law-makers and regulators hammer out the specifics of the new Public Accountability Board proposed by Securities and Exchange Commission (SEC) Chairman Harvey Pitt and endorsed by President Bush, the Big Five firms may catch a break on long-awaited reviews of their auditor independence systems. Under a program started two years ago, the Big Five were directed to modernize their internal independence compliance systems according to a timetable set by the SEC.

AICPA's New Ads - Will the Media Get the Message?

The American Institute of CPAs (ACIPA) has announced the launch of a new advertising campaign to help restore confidence in the profession. New print ads will begin to run on March 10, 2002 in the Wall Street Journal and other major newspapers. These ads will emphasize the roles of CPAs away from the headlines, engaged in the daily routine activities of auditing financial statements, providing tax services and delivering business insight.
Community News

Andersen's Client Losses Continue

Beleaguered Andersen was dealt another blow Wednesday when mortgage giant Freddie Mac dropped the Big Five firm after a 30-year audit relationship. Freddie Mac joins a long and growing list of clients that are abandoning Andersen in the aftermath of the firm's involvement in the Enron collapse.Freddie Mac replaced Andersen with PricewaterhouseCoopers, the firm that so far seems to be reaping the largest benefit from Andersen defectors.


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