Arthur Andersen

1
Arthur Andersen

• Who audits the auditors?

2
Arthur Andersen Clients

• Enron
• Worldcom
• Global Crossing

3
Role as Auditors

• To provide reasonable assurance that financial
  statements are free from significant and
  material misstatements
• Independence is crucial and obligatory
• Large number of regulations covering acceptable
  procedures

4
What went wrong?

• Consulting and Auditing together
• On the Edge Accounting
• Obstruction of justice destroyed key documents
  in Enron case

5
Results

• Found Guilt of Obstruction of Justice
• Defection of accounts
• Arthur Andersen is poison
• Over 1.3 Billion in billings lost
• Forced to stop auditing
• Ceased Auditing as of August 31
• Only one person found guilty of obstruction
• Plead guilty to charges rather than assert his
  5th amendment rights