Enron: The story so far

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.)

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.

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.

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

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

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

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

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.

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.

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.

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.

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

“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.

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