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. Deloitte & Touche, the firm issuing the report, offered an "unmodified" opinion of the firm's accounting and auditing practices.

According to the review, Andersen's system of accounting and auditing quality has been deemed to provide reasonable assurance of compliance with professional standards, following the most extensive peer review in the firm's history. The scope of the Peer Review had been expanded in the wake of revelations about events leading to the debacle at Enron.

"In our opinion, the system of quality control for the accounting and auditing practice of Arthur Andersen LLP in effect for the year ended August 31, 2001 has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA, and was complied with in the year then ended to provide the firm with reasonable assurance of complying with professional standards."

Deloitte & Touche, LLP

A copy of the Andersen Peer Review can be downloaded here (in PDF format).

The integrity of the peer review process was almost immediately criticized by analysts, including Professor Lynn Turner, a former Securities & Exchange Commission chief accountant and current director of the Center for Quality Financial Reporting at Colorado State University.

"If the process was really credible I don't think we'd be having the rash of problems we are having today," said Turner. He cited reporting problems that have cost investors billions such as those at Enron, other Andersen clients such as Waste Management Inc. and Sunbeam Corporation, and other high profile failures after audits by other top firms at Cendant/CUC, Rite Aid and MicroStrategy.

Critics of the peer review process point to the fact that since the process began in 1978 no Big Five accounting firm has ever received a qualified opinion of its accounting procedures from a rival.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Sep 18
In this course, Amber Setter will shine the light on different types of leadership behavior- an integral part of everyone's career.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.