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. Pitt emphasizes that the SEC is focused on aspects of the Enron demise that affect investors and "whether proper compliance with all our securities laws and rules applied."
He also describes the SEC's responsibility as assuring people that situations like Enron are not likely to reoccur. In addition, he discusses the SEC goal of creating "a system of financial reports that nonexperts can read, digest, and understand."
In his interview, Mr. Pitt makes special mention of his opinion that the problems that exist with Enron and with auditing in general are not a function of auditor independence, but "go to the integrity and structure of internal control systems and the audit process itself." Where auditors are responsible, however, Mr. Pitt follows a hard line: "If you violate the law, you will pay for it, and we will be aggressive."