I think Andersen should revoke the license of the Texas regulators.
>>May 23 8:06pm ET
AUSTIN, Texas (Reuters) - In a harsh blow to embattled Andersen, Texas regulators filed a motion on Thursday to revoke the state license of the Big Five accounting firm for its role in the collapse of Enron Corp.
The Texas State Board of Public Accountancy said it was also seeking at least $1 million in fines in the toughest enforcement action in the agency's history.
It accused Chicago-based Andersen , which is currently on trial in federal court on a criminal charge of obstruction of justice, of audit failures, lack of integrity and document destruction in its handling of the Enron account.
"Andersen's failure to comply with professional standards was not the result of the actions of one 'rogue' partner or 'out-of-control' office, but resulted from Andersen's organizational structure and corporate climate that created a lack of independence, integrity and objectivity," the state board said in its strongly worded filing.
The board's executive director, William Treacy, told Reuters the motion would be heard by the State Office of Administrative Hearings on a date not yet set, but likely to be within 90 days.
Andersen was Enron's auditor until the energy trading giant filed the largest U.S. corporate bankruptcy in history last December amid revelations that it had cooked the books with Andersen's blessing to hide billions of dollars in debt and inflate profits.
ON TRIAL
The accounting firm is currently on trial in federal court in Houston for allegedly obstructing justice by shredding Enron-related documents to keep them out of the hands of government investigators.
Andersen has said it destroyed Enron audit records in the normal course of business -- not to cover up its role in the Enron debacle, as federal prosecutors have charged.
Andersen partners have implied in court testimony that the firm's lead Enron auditor, David Duncan, was wholly to blame for whatever wrongs were committed with the lucrative Enron account.
But the accounting board's motion said that "regardless of the potential criminality of this conduct, the destruction of these records is an act discreditable to the profession."
Duncan has pleaded guilty to obstruction of justice and testified against his former employer earlier in the nearly three-week-long trial.
The accounting board said Andersen should be assessed a $1,000 fine for each accounting code violation.
"It is estimated that these individual violations could number into the thousands as the Enron financial statements are substantial and complex and contain numerous departures from GAAP (Generally Accepted Accounting Principles)," it said.
Andersen, once a $9 billion firm, has lost hundreds of clients because of the Enron collapse and is struggling to survive in a reduced form.
Treacy said the Texas board had never before sought the revocation of a license for a Big Five accounting firm and had never levied a fine of more than $500,000.
Earlier this week, the agency fined Andersen a total of $250,000 for inflating the value of a Houston supermarket chain's stock in 1993 and conducting sloppy inventory for another Houston company in 1989. |
