Word: andersens
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When Arthur Andersen, the accounting giant, and Andersen Consulting went their separate ways last year, the smaller firm endured a lot of teasing for changing its name to Accenture--a handle suggested by someone in the Oslo office. But now that its creative work on Enron's books has turned Arthur Andersen into a global pariah, the consulting firm's name change looks like a stroke of genius. And it's being emulated. PricewaterhouseCoopers--whose accounting work for K Mart and Tyco has been criticized--is spinning off PricewaterhouseCoopers Consulting in August. And so eager is the new firm...
...profits. Now the company is teetering on the edge of bankruptcy. It will cut 17,000 jobs, about 25 percent of the work force, by Friday, and CFO Scott Sullivan has been fired over the accounting debacle. Also drawn in, once again, are the beleagured auditors at Arthur Andersen, who were in charge of monitoring WorldCom's books...
Even an acquittal would probably not have saved the firm. "The verdict doesn't matter anyway," says Arthur Bowman, editor of Bowman's Accounting Report. "Arthur Andersen is dead. Once the indictment was handed down, clients started jumping faster than they did off the Titanic." A third of the firm's 2,300 clients have jumped ship; the top clients are gone, and parts of the company have been sold off. About 5,000 of the 26,000 U.S. employees remain...
...Andersen testimony will be helpful. Duncan told jurors he didn't believe the $1 billion loss the company took to unravel some off-the-books partnerships was enough reason to question Enron's future health. If Andersen's lead accountant wasn't worried, why should Lay have been concerned? "Duncan definitely harmed the case against Lay," says former prosecutor and Houston securities lawyer Christopher Bebel. On the other hand, he says, lower-level Enron executives facing charges won't find much solace in the transcripts...
...only when the rinse cycle begins," a wise old friend of mine likes to say, "that you can tell how dirty the laundry really was." With Enron, Arthur Andersen, Henry Blodget and Dennis Kozlowski all sloshing back and forth in the muck, it has become clear to everyone that the late bull market in stocks was fueled partly with Potemkin profits, partly with bluster, partly with outright lies...