SEC Accuses Former Andersen Partner of Fraud | AccountingWEB

SEC Accuses Former Andersen Partner of Fraud

The Sunbeam Corporation continued to cast a murky shadow over Andersen this week when the Securities and Exchange Commission sued Andersen's lead partner on the Sunbeam audit in connection with an alleged massive financial fraud.

The Big Five firm has already paid out $110 million in a no-blame agreement with shareholders after a class action suit alleged fraudulent financial reporting and accounting practices under former Sunbeam management led by Al Dunlap.

Now Mr. Dunlap, four former officers from Sunbeam, and Andersen's audit partner Phillip Harlow have been charged with fraud by the SEC.

The SEC's complaint alleges that the senior management of Sunbeam, led by Mr. Dunlap and former finance chief Russell Kersh, engaged in a fraudulent scheme to create the illusion of a successful restructuring of Sunbeam and thus facilitate a sale of Sunbeam at an inflated price.

According to the complaint, the defendants employed a laundry list of fraudulent techniques, including creating "cookie jar" revenues, recording revenue on contingent sales, accelerating sales from later periods into the present quarter, and using improper bill and hold transactions.

Part of the complaint alleges that, for the 1997 fiscal year, at least $60 million of Sunbeam's reported $189 million in earnings from continuing operations came from accounting fraud.

Mr. Harlow is specifically accused of authorizing unqualified audit opinions on Sunbeam's 1996 and 1997 financial statements although he was aware of many of the Company's accounting improprieties and disclosure failures.

Andersen issued a statement defending Mr. Harlow, saying that the complaint comes as a result of disagreements over accounting standards.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.