Auditing

Community News

Andersen Raised Concerns About Enron a Year Ago

The Washington Post reports today that an internal Andersen e-mail message prompted top management to consider dropping Enron as a client as early as February 2001 because of concerns about bookkeeping irregularities.According to sources, the e-mail message (available in PDF format here) was sent to two partners in the Houston office as well as other

New Accounting Oversight Plans to be Announced Today

In the wake of the Enron situation, the Securities and Exchange Commission under the direction of Chairman Harvey L. Pitt is working with members of the accounting industry to design new rules that could help protect investors from unexpected company failures.Mr. Pitt has scheduled a news conference for 1:30pm EDT today to outline a framework for a professional oversight panel that would include accountants and non-accountants, among other proposals.
Community News

Andersen Dismisses Lead Auditor on Enron Job

Big Five firm Andersen has fired David B. Duncan, the partner who headed the Enron audit, after learning the partner ordered the "rushed disposal" of documents relating to the audit. Mr. Duncan ordered the destruction of documents during a meeting on October 23, having just learned of the Securities and Exchange Commission's intent to investigate Enron. Two weeks later, the day after Andersen received a federal subpoena for documents, an assistant for Mr.
Community News

Grant Thornton Case: Another Evidence-Destruction Debacle?

In a $2.1 billion action against Grant Thornton, a Baltimore Circuit Court has appointed a Special Master to investigate a possible violation involving the withholding and willful destruction of audit records in a manner likened to the contemporary but better-publicized Enron case.The case against Grant Thornton was brought by Carnegie International, an Internet support and computer telephony holding company with specialization in telecommunications products, services and distributio

SEC Censures KPMG, Orders Tighter Independence Controls

Adding to the accounting profession’s mounting credibility problems, the Securities and Exchange Commission (SEC) announced on January 14, 2002 that it had censured Big Five firm KPMG for purporting to serve as an independent accounting firm for a client while it held substantial investments in the client.
Community News

Lieberman on Andersen: 'Enron Episode May End This Company's History'

Senator Joseph Lieberman (D-CT), chairman of the Senate Governmental Affairs Committee, one of the several government agencies investigating the Andersen/Enron affair, appeared on CBS's Face the Nation on Sunday, and described what he said may be criminal activity on the part of Big Five firm Andersen. "We know that Arthur Andersen, the supposedly independent auditor, covered up facts very relevant to the condition of Enron," said Sen. Lieberman. "Arthur Andersen is a great company with a great name.

Levitt Warns of New Accounting Regulation, Investor Caution

Recent allegations about potential fraud, cover ups, document shredding and criminal investigations in the Enron scandal have once again given former SEC Chairman Arthur Levitt a platform to speak out against the status quo in the accounting profession.Responding to Andersen's disclosure last week about destroying documents, Mr. Levitt told the Wall Street Journal that it is time for outside auditors to accept tough oversight through a new government-sponsored self-regulatory organization.Mr.

Andersen Admits Destroying Enron Documents

In a startling announcement to the Securities and Exchange Commission and the Department of Justice late Thursday afternoon, Big Five firm Andersen admitted that members of the firm destroyed perhaps thousands of documents relating to the firm's audit of failed energy giant Enron.The firm indicated the documents were destroyed according to firm policy requiring "destruction of certain types of documents in certain circumstances." Andersen has suspended it

Free Toolkit For Related Party Transactions

The American Institute of Certified Public Accountants (AICPA) has issued guidance on the timely subject of related parties and related-party transactions. The guidance was written with the counsel of the eight largest U.S. accounting firms: Andersen, BDO Seidman, Deloitte and Touche, Ernst & Young, Grant Thornton, KPMG, McGladrey & Pullen, and PriceWaterhouseCoopers.
A&A

FASB Forges Ahead on Three New Frontiers

At its January 9, 2002 meeting, following a rash of well-publicized complaints about the slowness of the accounting standard-setting process, the Financial Accounting Standards Board (FASB) decided to forge ahead on three new frontiers. It tentatively agreed to: 1. Issue for public comment a prospectus for a major project to update the concepts and principles of revenue recognition. 2.
A&A

New Considerations For Financial Statement Prep This Year

The recessionary economy. Recent business failures. The events of September 11. All of these economic influences converged in 2001 to create one of the most turbulent financial reporting environments in recent memory, requiring the extra care and attention of financial statement preparers to ensure that the public has a clear picture on the health and welfare of American businesses.The Big Five accounting firms, in cooperation with the American Institute of CPAs, has issued a detailed list of risk factors to consider when preparing and communicating financial results for 2001.
A&A

Description of FASB Projects Discussed January 9, 2002

The following project descriptions were excerpted from materials made public at the FASB meeting on January 9, 2002. 1. Revenue recognition. The proposed project would have two principal goals: (1) enhancing the authoritative and conceptual guidance for recognizing revenues, and (2) refining the conceptual guidance for defining and recognizing liabilities. The FASB project would lead to the issuance of a new accounting standard on revenue recognition that would apply to business entities generally.
Practice Management

Homestore.com Trips on Barter Accounting; Who's Next?

U.S. retail and property service Homestore.com joins the list of companies investigating possible accounting irregularities. In a recently-filed Form 8-K, the company said that it expects to restate its nine-month financial results and reduce the revenue figure by as much as $95 million to better reflect the nature of on-line advertising transactions that should have been accounted for as barter transactions.

Watch for SEC Guidance Affecting 2001 Reports

The Securities and Exchange Commission (SEC) is mulling over a draft of new guidance that could affect preparation of annual reports for the year just ended. The draft was submitted by the Big 5 firms and the AICPA, all of whom are petitioning SEC to issue speedy guidance in the form of an “interpretive release” applicable to the MD&A (Management Discussion and Analysis) portions of 2001 annual reports on Form 10-K.
Community News

U.S. Senate To Join In On Enron Investigation

A US Senate Committee has joined other Congressional panels in an investigation of failed energy giant Enron.The Governmental Affairs Committee's permanent subcommittee on investigations, said its panel will subpoena top executives and directors of Enron to determine their role in the collapse of the company. Additionally, financial and trading records from Enron and audit documents from its accountant, Arthur Andersen LLP, will be subpoenaed, according to Sen. Carl M.
Community News

Andersen Get 'Thumbs-Up' on Peer Review

In an exercise that is sure to capture the attention of the SEC, the Peer Review Committee of the American Institute of Certified Public Accountants' (AICPA) SEC Practice has accepted a "clean" Peer Review of Big 5 accounting firm Andersen.

Disney May Set Precedent for Auditor Independence

In a decision that may set a precedent for the public accounting profession, the Securities and Exchange Commission has ordered Walt Disney Company to go forward with a shareholder vote on whether the company's outside auditor may perform consulting work for Disney.Last year, Disney's outside auditing firm, PricewaterhouseCoopers, performed consulting services in the areas of tax, accounting, information services, and business process matters.
Community News

UC Hopes to Lead Class Action Suit Against Andersen, Enron

The University of California (UC), the nation's largest university system, has announced plans to join a class action suit against 29 senior executives of the failed Enron Corp. and Big Five accounting firm Andersen. The University claims it lost $145 million in Enron's collapse and seeks to be the lead plaintiff in the class action suit.

Why Aren't Audit Reports More Like Movie Reviews?

The following opinion piece was written by Paul Clikeman, Associate Professor of Accounting at the University of Richmond, and published initially on the Accounting Education using Comupters & Multimedia Listserve. Your comments and opinions on this piece are welcomed!When Roger Ebert reviews a movie, he communicates his opinion in three ways.

SEC's Pitt to Auditors: 'You Will Pay'

The Securities & Exchange Commission has launched a formal investigation into the recent collapse of energy giant Enron Corp. and has subpoenaed records from Big Five firm Andersen in relation to that investigation. In the December 24 issue of Business Week magazine, SEC Chairman Harvey Pitt discusses the investigation and the role the SEC expects to take in preventing such problems in the future.In his interview with Business Week, Mr.

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