Enron: The story so far

Sunday, 04 Feb, 2002 0

The collapse of Enron – the world’s biggest ever business failure – could have a cataclysmic effect on the accountancy profession as the US looks to find a scapegoat for the disaster.

This timetable of events, created by TravelMole’s sister site, accountingweb.co.uk, explains how this affects Andersen – the firm at the centre of the debate – and the profession as a whole (nb. the following hyperlink through to the accountingweb site.)

4 Feb – Andersen ‘paid for partnerships work’; New Oversight Board planned
A weekend of high drama in the Enron affair saw top management from the collapsed energy giant and Andersen accused of “across the board failures” in a damning report from congressional investigators.

1 Feb – Andersen UK staff ‘starting to jump ship’; Firms shy away from consultancy; Hard Rock ditches Andersen
Top Andersen executives are on the verge of moving on in light of the Enron scandal, according to reports.

1 Feb – Opinion: Accountants attempt PR fightback
Andersen UK senior partner John Ormerod emerged from his bunker to defend the firm’s reputation – but has the profession’s fightback been a success?

31 Jan – Changes on the way at Andersen
Andersen CEO Joe Berardino has said that “several significant changes” in the way the firm does business will be announced in the near future.

30 Jan – NY to leave Andersen?, NASA account hole, Partnerships under microscope

The media frenzy over Andersen and the Enron scandal – dubbed AndersenGate by the Daily Mail – took another turn today as New York City reviewed its work with the Big Five firm.

29 Jan – Andersen’s Berardino – Serious errors made; Andersen manager steps in

Andersen chief executive officer Joe Berardino has admitted that serious errors were made in its work at Enron, but attempted to distance the rest of the staff from those mistakes.

28 Jan – Consulting clampdown, PwC ‘knew of huge debts’, Call for UK govt probe, Andersen fights back

The US has cracked down on auditing firms providing non-audit services. And PwC consultants knew of the huge debts at Enron in 1999

24 Jan – Lay resigns; Now Andersen CEO to avoid Senate

Enron chairman Ken Lay announced he was resigning from the company. Andersen CEO aviods Senate committee

23 Jan – Public Oversight Board To Close Its Doors in Protest

The independent body that oversees the self-regulatory function for auditors – the Public Oversight Board (POB) – intends to close its doors no later than March 31, 2002

18 Jan – SEC’s Pitt Calls For End to Accounting Self-Regulation

SEC chairman Harvey Pitt said that he was ready to take action to preserve the integrity of the tarnished accounting profession by establishing a new oversight body

18 Jan – MPs call for consultancy ban on auditors

Labour MP Austin Mitchell has tabled an early day Commons motion calling for auditors to be banned from undertaking other non-audit work for their clients.

18 Jan – Prem Sikka challenges PwC and the audit profession

Responding to a defence of the audit profession’s integrity laid out by PwC partner Rodger Hughes, Essex University accountancy professor Prem Sikka offered this detailed critique of the current auditing system.

18 Jan – Enron fires Andersen; Head office ‘knew of paper shredding’; New oversight board

Collapsed energy giant Enron has sacked Andersen as auditor as the latest reports suggest that the Big Five firm’s Chicago HQ discussed destroying documents in the weeks leading up to the shredding.

17 Jan – Andersen’s Enron partner ‘following orders’; Firm ‘warned of scandal risk’

Embattled Andersen would have us believe that David Duncan was solely responsible for the destruction of documents at Enron, according to reports. His lawyers say otherwise.

16 Jan – Andersen admits papers destroyed after SEC requests; Sacks lead partner

Beleagured Big Five firm Andersen has admitted that it destroyed documents at Enron after US regulators requested information

16 Jan – US audit crisis: Fallout from the Enron collapse

“Enron is a watershed,” commented AccountingWEB member Phil Cracknell after we reported on Monday that legal claims arising from the oil trading company’s collapse could force Andersen to merge with a Big Five rival – if any of them can afford to take on the dubious dowry.

16 Jan – US audit crisis: A timetable of calamity

The accounting profession in the US has seen a torrid few weeks in 2002.