States May Revoke Andersen's License to Practice

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Connecticut and New York CPA licensing authorities are looking into the possibility of revoking Big Five firm Andersen's right to practice in their respective states, in light of the firm's admitted mishandling of documents in the Enron affair.

Regulators are attempting to determine if Andersen broke laws in their states. Michael Kozik of Connecticut's State Board of Accountancy said, "We've been informally investigating...but in light of the attorney general's request, we've begun a formal investigation." Mr. Kozik said that Andersen could face civil penalties or restriction on its practice in the state.

The New York Education Department's office of professions is monitoring the developments relating to Andersen and Enron. "Will we revoke licenses?" said spokesman Tom Dunn. "That's clearly premature."

Andersen had its license to practice revoked in Connecticut in the mid 1990s as a result of the firm destroying incriminating documents relating to the collapse of client Colonial Realty Co.

Paul R. Brown, accounting chairman at New York University's Stern School of Business, suggested that if Connecticut and New York revoke Andersen's license to practice "there could be a ripple effect" in other states.

In related news, lawyers representing Enron shareholders have filed a motion in Houston federal court seeking access to Andersen's offices in Chicago and Houston and requesting that computer equipment owned by Andersen be impounded. Lawyers expressed concern that e-mail messages and other electronic files relating to the Enron audit have been destroyed and wish to attempt recovery of such files.

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