Auditing

Enron, Andersen Testify Before Congress

Congress has scheduled its first hearing into the Enron situation and expects to hear testimony from Big Five firm Andersen, the Securities and Exchange Commission, and Enron.Andersen was the auditor for the energy company and has been criticized for its handling of the audit. Joe Berardino, Andersen chief executive, will testify before the House Financial Services Committee in the Enron matter on Wednesday.SEC Chairman Harvey Pitt has indicated he will not appear before the committee at this time, but SEC Chief Accountant Robert Herdman will testify.
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POB to Oversee Deloitte Peer Review of Andersen

The Public Oversight Board, the group that, among other tasks, oversees the peer review process required of all public accounting firms that audit publicly held companies, has decided to take an active role in the expanded peer review that Deloitte & Touche is providing to Andersen.Andersen announced last week it has requested the expanded review as a result of the recent news of Enron's misstated financial statements."We're looking at the systems and specific areas affected by the

Report Says Auditing Review Process Lacks Discipline

In the second of a series of two articles about the accounting profession, The Washington Post staff writers investigate the disciplinary process in place in the accounting profession.The reporters examined hundreds of cases of disciplinary action against accountants and found, for the most part, that accountants rarely face public accountability. "The deterrent effect that's necessary is just not there," according to Douglas R.
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Enron: Andersen Hits Back after $1B Lawsuit Threat

Andersen chief executive Joe Berardino has lambasted the financial reporting system as it was hit by a $1 billion legal threat from disgruntled former employees of the energy giant Enron.According to an article in the British newspaper, The Times, members of Enron's retirement plan are seeking the damages, together with the return of Andersen's fees, in the first shot in what could be a lengthy battle for compensation in light of the $80 billion lost at Enron.
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Big Five Vow To Improve Standards

Facing up to a raft of negative publicity for the accounting profession in light of Big Five firm Andersen's association with failed energy giant Enron, members of all of the Big Five firms joined proverbial hands on Tuesday and vowed to uphold higher standards in the future."When businesses fail and public confidence wanes, all involved in the capital markets have a responsibility to actively seek to understand the core problems and pursue meaningful solutions," the chief executives of Andersen, KPMG, Deloitte & Touche, PricewaterhouseCoopers and Ernst & Young

Washington Post Articles Take Aim at Accountants

The Washington Post has begun a series of articles that place the accounting profession under a microscope.
Community News

Andersen Agrees to Expanded Peer Review

Big Five firm Andersen will face an expanded peer review from Deloitte & Touche as a result of the recent controversy surrounding Andersen's audit practices with regard to energy giant Enron.The expanded review will include a review of the procedures at Andersen's Houston office, which was in charge of handling the Enron audit."In light of recent developments, we believe that extending the peer review to include work done in other offices, including Houston, and other procedures that Deloitte & Touche deems appropriate and necessary is the right thing to do," said Andersen chief executiv

AICPA Issues Amendments to Independence Rules

The auditor independence quality controls sought and established last year by the Securities and Exchange Commission have resulted in an amendment to the auditor independence rules by the SEC Practice Section (SECPS) of the American Institute of Certified Public Accountants.This amendment is effective January 1, 2002. The SECPS has updated its "Independence" training course to take into account the SEC's new rules.
Community News

Andersen Enron Fiasco Prompts Look at Peer Reviews

The recent news of Enron Corp.'s need to restate financial statements dating back to 1997 as a result of accounting issues missed in Big Five firm Andersen's audits, has caused the Public Oversight Board to decide to take a closer look at the peer review process employed by public accounting firms.In the peer review process, accounting firms examine one another and publish opinions that assure investors that audits performed by the firms comply with accounting standards.
Community News

Andersen Faces SEC Sanctions over Enron Reporting

Enron, the natural gas and energy services giant, has been in the headlines in recent months regarding a massive restatement of shareholder equity that caused a shudder on Wall Street.
Community News

Accenture Shows PwC Auditors the Door

Accenture is dropping PricewaterhouseCoopers as its auditors, effective upon completion of the current financial statements, which should be finalized by the end of November.Indicating that the reason for the decision to cut PwC loose is based on the competition between the two companies, an Accenture spokeswoman stated, "When we hired them they had every intention of selling their consulting practice.

FASB Releases Video On Quality Financial Reporting

The Financial Accounting Standards Board (FASB) has released "Financially Correct," a video program that it has produced to help educate the public about why high-quality financial reporting is so important to investors and the efficiency of the financial markets.

AICPA Statement on FASB Decision

The Financial Accounting Standards Board (FASB) recently decided NOT to allow extraordinary treatment of financial statement items relating to the September 11 terrorist attacks.

AICPA Extends Comment Deadline

The American Institute of Certified Public Accountants (AICPA) has extended the deadline for comments on the proposed AICPA Statement of Position (SOP), Accounting for Certain Costs and Activities Related to Property, Plant, and Equipment. The new deadline is extended 31 days to November 15, 2001.The Financial Accounting Standards Board (FASB) has also extended the comment deadline for comments on its Exposure Draft, Accounting in Interim and Annual Financial Statements for Certain Costs and Activities Related to Property, Plant, and Equipment.

SEC Eases Auditor Independence Rules

The Securities and Exchange Commission, in an effort to promote a calm and orderly return to stock market trading, has agreed to ease several rules.In particular, SEC chairman Harvey L. Pitt has announced that effective immediately, accounting firms may provide bookkeeping services and aid in the recovery of records for clients with offices in and around the World Trade Center.

Dixie Chicks Accuse Sony of Fraudulent Accounting

Country singers, the Dixie Chicks, have filed a lawsuit against their recording company, Sony Corp., alleging "fraudulent accounting gimmicks" that cheated the group out of approximately $4 million.The singing group paid for an audit of their royalty account at Sony, although the name of the firm or people performing the audit has not been released.In the lawsuit, which was filed in New York federal court, the group claims that Sony underreported sales figures and overc

Deloitte Report Exposes Manipulation of London Tube Figures

Following a court hearing on Friday, August 24, Transport for London has published a Deloitte & Touche report that criticized the British government's plans for London Underground, according to our sister site, AccountingWEB-UK.London mayor Ken Livingstone and Transport for London commissioner Bob Kiley have used every possible means at their disposal to avoid being forced to fund improvement's to the capital

Minnesota Investors Sue E&Y Over $12 Million Loss

An Illinois transportation services firm, Asche Transportation Services, Inc., declared bankruptcy last December, but not before Minnesota investors sunk $12 million into the company, relying on statements published by Ernst & Young.Claiming the Big Five firm performed sloppy work, made fraudulent representations, and failed to report financial irregularities, Minnesota-based Churchill Environmental and Industrial Equity Partners LP has sued E&Y in hopes of recovering its investment.The lawsuit cla

Accounting Standards Overload: Is There Light at the End of the Tunnel?

On August 16, 2001, the Financial Accounting Standards Board issued its 143rd statement. The prospect of complying with yet another statement has fueled concerns about “standards overload,” sending some practitioners in search of a kinder, simpler solution to generally accepted accounting principles (GAAP). As a private-sector standard-setter, FASB has looked to statements as a key source of funding since its inception in 1973.

SEC Urged to Speed Up Investigations

In an interview reported in the Financial Times today, Jim Copeland, CEO of Deloitte Touche Tohmatsu, urged the SEC to speed up its investigative processes and bring more definitive conclusions to its investigations of audit failures.Mr. Copeland lamented the fact that the credibility of the auditing profession was at stake when investigations drag on for many months or sometimes many years. "You never come to closure on these things," he said.

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