E-mails by Carl Bass, a Houston-based partner in the Professional Standards Group-the firm's corps of top accounting experts-reveal how the PSG's lack of authority compromised Andersen's audits
Bass and other members of the Professional Standards Group (PSG) wrote memos objecting to Enron's accounting for its partnership deals, including the LJM II partnership and the Raptor transactions. Bass alleges that some of PSG's views were not conveyed to Enron.
Andersen's Houston office overruled the conclusions of the PSG in favor of Enron, according to Bass and other Andersen experts. Andersen is the only Big Five accounting firm that allows local engagement partners to overrule its national-office experts, say the SEC and congressional investigators.
When Bass saw that the Enron audit team had written memos claiming that he and other PSG members had approved accounting decisions they had in fact opposed, he complained. In October, 2001, the firm rewrote some of the memos to reflect Bass's opposition.
Bass says Enron execs had a pipeline into Andersen's internal debates and saw him as a roadblock. In March, 2001, under pressure from Enron, Houston asked the national office to remove Bass from overseeing Enron--and from the PSG. Both requests were granted.