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Enron Mail |
FYI -=20
-----Original Message----- From: =09Iannarone, Lauren =20 Sent:=09Friday, November 02, 2001 9:46 AM To:=09McKalip-Thompson, Catherine Subject:=09anderson 06/20/2001 The Globe and Mail Metro B13 "All material Copyright © Bell Gl= obemedia Publishing Inc. and its licensors. All rights reserved." WASHINGTO= N -- The U.S. Securities and Exchange Commission, in one of the first fraud= cases ever filed against a Big Five accounting firm, fined Arthur Andersen= LLP and three partners more than $7-million (U.S.) in connection with audi= ts of Waste Management Inc.'s annual financial results.=20 In a complaint filed in U.S. District Court here, the SEC alleged that Arth= ur Andersen and its partners allowed Waste Management to continue for sever= al years a series of improper accounting practices that inflated the garbag= e-hauling concern's earnings. The complaint alleges fraud on the part of th= ree audit partners assigned to the Waste Management account: Robert Allgyer= , 56 years old, of Lake Forest, Ill., who has retired; Walter Cercavschi, 4= 5, of Harwood Heights, Ill.; and Edward Maier, 54, of Chicago.=20 Arthur Anderson agreed to pay the fine to settle the case, but the firm and= the auditors don't admit or deny the allegations. Among the audit partners= , Mr. Allgyer agreed to pay $50,000, Mr. Maier, $40,000, and Mr. Cercavschi= , $30,000. Arthur Andersen agreed to pay $7-million. As part of a campaign= to curb what it sees as growing accounting fraud, the SEC has broadened a = number of investigations of companies' earnings reports to include audit wo= rk done by outside accountants. In bringing the first fraud case against a= ny audit firm since 1985, SEC enforcement chief Richard Walker said the act= ion "helps to underscore the importance of auditors as gatekeepers to our c= apital markets and shows the SEC won't shy away from making auditors comply= with their responsibilities." Under a related administrative proceeding f= iled yesterday alleging professional misconduct, the SEC also censured Arth= ur Andersen, the three audit partners and a fourth partner, Robert Kutsenda= , who was the regional audit director at the time of the alleged violations= . As part of the censure, the four audit partners are barred from doing acc= ounting work for public companies for a period of one to five years. "This= settlement allows the firm and its partners to close a very difficult chap= ter and move on," said Terry Hatchett, Arthur Andersen's managing partner-N= orth America. "The SEC has not questioned the underlying quality or effecti= veness of our overall audit methodology, nor has the SEC limited our abilit= y to conduct audits for other public companies." An attorney for Mr. Allgy= er declined to comment. Attorneys for Mr. Maier, Mr. Cercavschi and Mr. Kut= senda didn't return phone calls. Waste Management said it "has co-operated= fully with the SEC in the investigation, and does not believe that the SEC= will seek any action against Waste Management in connection with the event= s detailed in the Arthur Andersen settlement." The Waste Management accoun= ting scandal stands out for it size and breadth. After a board-led probe tu= rned up years of questionable accounting, the company took a $3.5-billion c= harge in 1998, and since then the trash hauler and Arthur Andersen agreed t= o pay $220-million to settle shareholder litigation in the matter. The com= pany admitted it had overstated its pretax earnings by $1.43-billion in 199= 2 to 1996 -- the biggest restatement in SEC history. Neither Waste Manageme= nt nor any of its employees have been disciplined by the SEC. The SEC said = yesterday that the investigation continues. Within the SEC, the Arthur And= erson investigation became a centrepiece of the commission's aggressive cam= paign to demonstrate that conflicts of interest can be caused by consulting= and other non-auditing services that numerous accounting firms now routine= ly offer audit clients. =09
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