Auditing

Community News

White House Cautions Agencies About Hiring Andersen

The Bush administration has issued a letter to federal agencies to carefully determine whether business practices and ethics are sufficient before hiring Big Five firm Andersen or Enron Corp. to perform government services.

AICPA Reverses Stance, Won't Oppose Independence Reforms

In a stunning about-face on January 31, 2002, the president of the American Institute of CPAs (AICPA) announced his organization’s support for reforms of auditor independence that would bar accounting firms from doing certain kinds of consulting for their audit clients.
Community News

Embattled Andersen Targeted on Several Fronts

New York City Controller William Thompson is considering rescinding Big Five firm Andersen's automatic approval to do business for the city. A "prequalified certified public accounting list" published by the city lists 97 CPA firms that are qualified to do business with city agencies. The controller is considering removing Andersen from the list. Mr.
Practice Management

Accountants Unite To Better Measure Business Risks

The accounting profession has united under the aegis of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in an organized effort to develop comprehensive guidance on risks, including the kinds of business risks that toppled Enron.COSO is comprised of five member organizations: The American Institute of CPAs, the American Accounting Association (AAA), Financial Executives International, the Institute of Internal Auditors and the Institute of Management
Practice Management

Survey Shows 'Immense Support for Auditing Reform'

A survey of Canadian business executives shows immense support for auditing reforms.
Community News

Andersen Named in Class Action Suit

Lawyers representing more than 400 current and previous Enron employees have filed a class action lawsuit in Houston, naming several Enron executives, Enron's auditor Big Five firm Andersen, and the Northern Trust Company as defendants.

Anonymous Tip Leads to Kmart Accounting Probe

With the Enron implosion still very fresh in the minds of American business, Kmart, which filed for bankruptcy last week, announced that it was beginning an investigation of its internal accounting practices. The investigation was triggered by an "anonymous letter," reportedly by company employees, expressing concern regarding unspecified accounting matters.

GAO Announces New Rules on Auditor Independence

As Congress continued its investigations and calls for reforms escalated in response to the Enron collapse, the General Accounting Office (GAO) found the time was right to take bold action. It decided to break ranks with the rest of the accounting profession and issue yet another independence standard with which auditors must comply. Restrictions on ConsultingGAO’s new standard introduces significant changes.
Tax

NCCPAP Leaders Speak Out On Enron & Accounting Issues

The leadership of the National Conference of CPA Practitioners (NCCPAP) announced today their concerns regarding the fallout from the events surrounding Enron. The leadership of the organization believes that this situation has the potential to permanently tarnish the reputation of this country’s Certified Public Accounting community.“Measuring the damage suffered by hard working taxpayers may take months, but make no mistake, the damage is substantial.
Community News

Enron Suicide Overshadows Andersen's Finger-Pointing

J. Clifford Baxter, 43, a former Enron vice chairman, was found dead in his parked car last Friday morning, accompanied by a revolver and a suicide note. Although it is assumed that Mr. Baxter's death is a suicide, a final decision on the cause of death will be made after an autopsy is performed on Monday.Mr. Baxter was intimately aware of and disdainful of the questionable financial practices of the energy giant and resigned from the company last May. Mr.

Pitt Gives Auditors A Lesson in 'SEC-Speak'

Speaking at a meeting of the Securities Regulation Institute, Harvey Pitt, Chairman of the Securities & Exchange Commission (SEC), spelled out some of the details of his plan to reform the accounting profession.
Community News

Andersen's Duncan Won't Testify (Yet); Enron's Lay Resigns

Fired Andersen partner David Duncan, the lead auditor on the Enron engagement, is scheduled to testify today before the House Energy & Commerce Committee. Although Mr. Duncan has expressed a desire to cooperate with all Enron-related investigations, he has indicated he plans to invoke the Fifth Amendment and refuse to testify unless he is given immunity.Representative Billy Tauzin, R-LA, chairman of the House committee, has asked the U.S. Justice Department to authorize immunity for Mr. Duncan, but as yet no agreement has been reached regarding this issue.

Public Oversight Board Agrees To Close Its Doors

On January 20, 2002, the Public Oversight Board (POB), the independent body that oversees the self-regulatory function for auditors of companies registered with the Securities & Exchange Commission (SEC), passed a resolution stating its intent to close its doors no later than March 31, 2002. Precipitated by remarks made just days earlier by SEC Chairman Harvey Pitt, the resolution removes any uncertainty about the Board's future.
Community News

E&Y and the Battle of Bull Run

Big Five firm Ernst & Young has been hit with a lawsuit by Bull Run Corp., a company that provides, among other things, marketing and event management services to universities, athletic conferences, associations, and corporations.The lawsuit alleges that E&Y failed to discover material errors in the accounting for prepaid expenses and receivables in its audit of Universal Sports America, Inc., a company that Bull Run acquired in late 1999.

How To Avoid Accounting Malpractice Suits

Mark Cheffers, CEO of AccountingMalpractice.com has created a primer for auditors based on lessons learned from Enron. In this multi-part series, Mr. Cheffers examines a number of issues in easy-to-read white papers (available for download at the end of this story). The parts include:Part I - Old Line Partners Wanted Part II - Why Andersen is so Exposed Part III - An Independence Dilemma Part IV - Could It Get Any Worse?

IFAC Adds International Ethics Rules to Post-Enron Equation

As if the U.S. auditor-independence rules weren’t complicated and controversial enough, the International Federation of Accountants (IFAC) has added new international ethics rules to the post-Enron equation. According to an announcement made by IFAC last week, its updated Accountants Code of Ethics is intended to serve as a model for the national standard-setting bodies that establish ethical guidance for accountants in countries around the world.
Community News

Andersen Puts the Enron Matter in Perspective

Perhaps the most controversial aspect of the Enron meltdown revolves around questions about the extent to which independence played a role in the events leading up to Enron’s restatement and subsequent bankruptcy.
Community News

States May Revoke Andersen's License to Practice

Connecticut and New York CPA licensing authorities are looking into the possibility of revoking Big Five firm Andersen's right to practice in their respective states, in light of the firm's admitted mishandling of documents in the Enron affair.Regulators are attempting to determine if Andersen broke laws in their states.
Community News

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.

Help For Audit Committees In The Post-Enron Era

An article in the January 21, 2002 issue of Business Week entitled How Governance Rules Failed at Enron questions the effectiveness of today’s audit committees.

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