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Fallout from Andersen chargesCompiled from Times wires© St. Petersburg Times published March 15, 2002 What is Andersen accused of? In the first criminal proceedings stemming from the Enron collapse, a federal grand jury in Houston returned a one-count indictment charging the accounting firm with obstruction of justice. The indictment says Andersen destroyed "tons of paper" and deleted huge numbers of computer files on its audits of Enron. Anderson called the charges "a gross abuse of government power" and "both factually and legally baseless." Were individuals charged? No individual employees were charged in the case, but the investigation of partners at the firm continues. What penalties does the charge carry? The maximum penalty is a five-year term of probation and a $500,000 fine. What is next for Andersen? Some experts say filing for bankruptcy may be the best remaining option for Andersen if it hopes to stop an exodus of clients and employees and find a buyer to salvage its operations. A Chapter 11 filing would enable Andersen to convert the more than three dozen lawsuits filed against it into bankruptcy claims. The firm said it has no plans to go into bankruptcy. What would happen if Andersen collapses? It would result in less competition in the auditing market. Some experts say that means auditing fees would rise, especially if firms are not allowed to perform auditing and consulting for the same company. Teams with experience auditing some of the nation's biggest and most complex companies could be in especially short supply. Can companies still turn to Andersen for audits? For publicly traded companies, the Securities and Exchange Commission said audits by Andersen are acceptable if the companies obtain quality assurances from the firm, including "continuity of Andersen personnel working on the audit" and consultation with its national office. The SEC gave companies that do not want to stay with Andersen approval to submit unaudited financial statements, generally with 60 days to produce a report from new accountants. - Source: Times wires
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From the Times wire desk
From the AP |
