Table: An Embarrassing Audit Trail
CLIENT EVENT UPSHOT
ENRON Enron had to reduce Enron filed for bank- 2001 shareholders' equity by ruptcy. Andersen faces $1.2 billion and consolidate shareholder lawsuits and, entities that Andersen initial- under subpoena, is coop- ly allowed it to account for erating with an SEC in- separately. Reported earnings vestigation. from 1997 to 2001 were cut by nearly $600 million.
SUNBEAM The SEC alleges that Sunbeam went into bank- 1997 Sunbeam used accounting ruptcy and is fighting tricks to create false sales the SEC claim. Andersen and profits and backdated paid $110 million to expenses to inflate results. settle shareholder lit- Andersen signed off on dubi- igation without admitting ous statements even after or denying blame. The SEC they were flagged by one of did not accuse Andersen the firm's partners, according of wrongdoing. to the SEC. Andersen is de- fending a partner, saying the issue is "differences of pro- fessional opinion," not fraud.
WASTE Andersen's audit reports Andersen accepted an MANAGEMENT were found to be materially antifraud injunction 1996 false and misleading by the and a censure without SEC, which ruled that Ander- admitting or denying sen had engaged in improper responsibility and paid professional conduct. The a $7 million civil pen- SEC found that Andersen did alty. It also agreed to not criticize company state- pay part of a $220 mil- ments that overstated its lion class-action settle- income by more than $1 bil- ment without admitting lion from 1992 to 1996. The fault. WM settled with company was later sold. the SEC without admit- ting liability.
Data: Company reports, court documents, SEC, Andersen,