Posted on 01/11/2002 3:59:30 PM PST by Dog Gone
Good riddance to them, too. I have had many dealings with this firm over the years and they specialize in BS.
This is accounting speak for let's give huge retirement bonuses with confidentiality string agreements to the most guilty executives and then hire a PR firm to run ads about how much community service we do.
You could hang Enron and Andersen executives there -- about two per block.
After the No. 5 accounting firm's startling admission on Thursday that it destroyed a number of Enron documents, Andersen faces legal wrangles and a desperate race to restore its once pristine credibility, say experts.
Let's be precise this. Did Andersen destroy Enron documents or did they destroy copies which had been provided to them in the course of their audit work? As long as client documents are copies and not an integral part of the workpapers, there is nothing inherently wrong with destroying them (although I imagine the answer would be different here if they were destroyed knowingly while under subpoena) . As a matter a fact, all sorts of copies of various records are deleted after an audit is completed. This article says NOTHING about what documents were destroyed. Without that piece of information, it tells us very little.
In a terse statement on Thursday, the company said its employees had disposed of or deleted a significant but unknown number of documents related to Enron in recent months.
Again, what KIND OF DOCUMENTS? Do most readers understand that there are many documents which are not considered necessary for inclusion in workpapers?
The firm violated one of the accounting profession's basic auditing standards by destroying documents, said Itzhak Sharav, a professor and accounting educator at Columbia University.
``You can't just have papers disappear,'' said Sharav. ``It's well established that you don't destroy working papers supporting an audit for three to four years. Even if it were a former client, you don't destroy them.''
Sure you can. Papers disappear all of the time. As long as they aren't part of the workpapers (and what is considered necessary documentation for workpapers is spelled out by Generally Accepted Auditing Standards as well as by individual firm policy) many documents (COPIES, not ORIGINALS) can be, and are, destroyed in the course of an audit.
IF, and I say IF, Andersen actually destroyed completed workpapers, I will be absolutely stunned.
What the article gets wrong is that they think that Andersen had a good reputation up until now. They just haven't been paying attention. Andersen loves to tag team deals with its sister company Accenture so that it gets huge tech-side consulting fees while its audits are being performed. That's always been out-of-bounds as far as my ethics are concerned.
Moreover, Andersen has been sued to high heaven for numerous botched consulting and auditing arrangements. I know for a fact that O'Neal Steel here in Alabama took Andersen out to the woodshed in court for their failed consulting promises, and Andersen auditors reported as "sound" IHI's financial condition just days before it became the largest bankruptcy in Australian history.
But as crooked executives probably know all around the world, if you want your audit to look good, then hire Andersen for your audit and hire their system firm Andersen/Accenture for your tech consulting...
In fact, there has even been an entire published BOOK written about Andersen's ethical shenanigans back in the 1990's.
Huge? That's not huge. That's not even the cost of a plate at some fundraising dinners.
Not that it matters. Somehow people seem to think that the sins of a contributor belong to the recipient. What kind of a leap of logic is that?
The Consulting Powerhouses and the Businesses They Save and Ruin
By James O'Shea and Charles Madigan
Times Business 355pp $27.50
That's at least one book that slams Andersen by name.
Its REAL EASY to have documents DISSAPPEAR!!! Especially if you are HILLARY CLINTON AND YOU'LL DO ANYTHING TO BECOME PRESIDENT!!!!!
But I think it strains credulity to believe that what is being talked about is copies of Enron material. Nor do I think it is finished work product relating to the audit.
Almost certainly, what is missing is the internal communications within Andersen from the principals involved in the Enron audit.
I say that because I have been involved in numerous subpoenas of records of my employer. That is often what is the most difficult to retrieve. Many times these are destroyed routinely, simply as work notes that become outdated. There's no problem with that. Nobody is required to keep every note they take or piece of paper they generate. There is a lot of trash created which is innocent and necessary.
But the stuff that you do keep that becomes part of your files, and the notes and other material that you haven't thrown away yet can't be destroyed once you've received a subpoena. That includes backup tapes for computers or anything at all which is relevant.
What apparently is missing, and we don't know for sure, is the backup material which is routinely kept. We don't have any explanation offered yet as to why these items are gone and that only adds fuel to the fire.
It's possible that this is entirely innocent. But it looks very bad, and given the gravity of the misrepresentation of the financial condition of Enron, it looks like someone is trying very hard to save their own butt.
I am not an attorney, so I don't know what the rules are regarding destruction of records in anticipation of subpoenas; but I would suggest that this happens far more frequently than the article implies.
One possibility I can think of is that when the news about Enron broke, the audit staff on the Enron account took it upon themselves to dump records. Whether that should have been prevented by senior management at Andersen is something that should be looked at.
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