Arthur Andersen has been indicted in the Enron scandal. I don’t like convicting people before a trial but it’s pretty much been admitted by all that Enron documents were shredded at the direction of at least some Andersen partners in their Houston office. To me this is more dispicable than what Enron executives may have done. One expects business executives to do all they can to put their company in the best light possible. It is the responsiblity of companies like Arthur Andersen to keep these executives as honest as possible in the representation ot their companies fiscal health. Andersen betrayed that public trust and has cast doubts on the credibility of all accounting reports.This is not something that investors need to also be worrying about during a time that we are attempting a recovery in the stock markets from the technology bust.
Because these actions have made all accounting reports suspect I believe it is important to the credibility of the industry that the firm of Arthur Andersen stand trial for crimes they may be guilty of. I believe the DoJ is doing the responsible thing in persuing the prosecution of Arthur Andersen and I applaud their efforts.
That is why I’m finding some of the things being said in the Senate as being curious:
Senators and accounting industry executives said Andersen may be doomed and that any collapse should be well-managed to avoid a negative effect on the markets.
”I think there’s a possibility of Arthur Andersen going bankrupt,” said Sen. Christopher Dodd, D-Conn., during a Senate Banking Committee hearing on possible reforms to accounting practices.
Such a collapse, said James Copeland, chief executive officer of Andersen rival Deloitte Touche Tohmatsu, would hurt the public interest by limiting the number of auditor choices for companies and weakening competition among the big accounting firms.
This almost sounds like Christopher Dodd could be making a plea for the DoJ to rethink this indictment. Doesn’t it?
I’m also a little troubled by James Copeland’s statement. Andersen is the fifth largest accounting firm in the country. If Andersen goes away then whoever is number six is going to take Andersen’s place as number five. Correct? Andersen has tons of highly educated and experienced accountants who will be looking for employment by all the other firms that are going to pick up all the work that Andersen was doing should Andersen go under. Correct? The way I see it if Anderson goes away there will be a couple of months of semi-chaos and then a smaller firm will step into the place Andersen held and all the displaced Andersen employees will be picked up to do the work that the other firms have picked up from the collapse of Andersen.
At least that’s the way I see it.