Question:

I’m pretty sure that no one at AA in the lower levels was deceitfull in the Enron audit, at least to the extent that their deceit caused the audit seniors and audit partner to arrive at a different conclusion.  More than likely, a staff auditor may have noticed something "not right" and at a minimum wrote a memo to someone higher up, you know, those volumes of papers that were shredded.  The worst case is they have their copy of the memo (and they seem to be surfacing as they get laid off), or they could have even "wrote it up" in the work papers, who knows?

At the bare minimum, experienced seniors were working on the SPE’s, IMO.  Most likely managers. Chris

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Very true. And I am sure that those lower level people working on the Enron account have been extensively questioned by the Feds and asked if they are aware of any "problems" at Enron they encountered. I ask you what such person in their right mind would lie, particularly when Duncan could have exposed

What makes you think that people engaged in criminal conduct are "in their right mind"? thier deceit once he turned? Why would Duncan hold out on the Feds, when some lower level type accountant could expose him, and change his likely 3 month stretch at Club Fed into 10 years in the Big House?

Let me see if I understand that. The lower level types won’t lie because Duncan will out them if they do. Duncan won’t lie because the lower level types will out him if he does. I guess nobody at Andersen can trust anyone else at Andersen to back up their lies – now, that is. Aside: What if the lower level types and Duncan tell conflicting stories? Which one is the liar? easy2000

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Could be – however Clinton’s power to pardon is no more, and will not return unless Hillary becomes president & Bill somehow manages to get on her good side (if she has one). And thank heavens for that.  What a scam that whole pardon fiasco (pardongate?) was.

But very profitable. — Todd Stephens

– *             Ronald Lee Todd M.B.A., C.P.A.                  * *  Unemployed for six years, mistake of being an accountant.  * *   Students, when someone tells you of your great future as  * *       an accountant, ask him to show you the job.           *

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But very profitable.

Hmm. I wonder if we could somehow connect Ken Lay to this.  Did Clinton pardon any of his relatives? — Todd Stephens

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As I remember from my auditing days, it was the "lower level" people (like me) that were in a better position to "see" things that might not be right. And if I remember, it was my job to point out to the senior auditors the problem I thought existed,

Very true. And I am sure that those lower level people working on the Enron account have been extensively questioned by the Feds and asked if they are aware of any "problems" at Enron they encountered. I ask you what such person in their right mind would lie, particularly when Duncan could have exposed thier deceit once he turned? Why would Duncan hold out on the Feds, when some lower level type accountant could expose him, and change his likely 3 month stretch at Club Fed into 10 years in the Big House?  

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Very true. And I am sure that those lower level people working on the Enron account have been extensively questioned by the Feds and asked if they are aware of any "problems" at Enron they encountered. I ask you what such person in their right mind would lie, particularly when Duncan could have exposed thier deceit once he turned?

I’m pretty sure that no one at AA in the lower levels was deceitfull in the Enron audit, at least to the extent that their deceit caused the audit seniors and audit partner to arrive at a different conclusion.  More than likely, a staff auditor may have noticed something "not right" and at a minimum wrote a memo to someone higher up, you know, those volumes of papers that were shredded.  The worst case is they have their copy of the memo (and they seem to be surfacing as they get laid off), or they could have even "wrote it up" in the work papers, who knows? — Paul A. Thomas, CPA Athens,  Georgia http://www.pat-cpa.com

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Political connections are a double edged sword. In this case the Bush Administration is publicly embarrassed.  In order to survive politically, the Bush crowd will need to PROVE they are not in Enron’s pocket. I don’t think it is just Bush.  

Of course it isn’t "just Bush", however the DOJ is currently part of the present Bush Administration.   In fact, I had *heard* (can’t confirm this myself) that over the years Enron had actually donated more to the Clinton administration than anyone else.  I guess it makes sense since Clinton was in office for 8 years (8 years that really saw Enron’s rise to power).

Could be – however Clinton’s power to pardon is no more, and will not return unless Hillary becomes president & Bill somehow manages to get on her good side (if she has one). — Jim Hudspeth, CFE, CPA   http://survivalworks.com

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Could be – however Clinton’s power to pardon is no more, and will not return unless Hillary becomes president & Bill somehow manages to get on her good side (if she has one).

And thank heavens for that.  What a scam that whole pardon fiasco (pardongate?) was. — Todd Stephens

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- Hide quoted text — Show quoted text – Political connections are a double edged sword. In this case the Bush Administration is publicly embarrassed.  In order to survive politically, the Bush crowd will need to PROVE they are not in Enron’s pocket. I don’t think it is just Bush. Of course it isn’t "just Bush", however the DOJ is currently part of the present Bush Administration.

Plus you have all those Clinton folks who got to burrow in.  They are still there in "so called" non policy "competitive" positions.  With the Civil Service, each administrations leaves a lot of permanent folks in high places. In fact, I had *heard* (can’t confirm this myself) that over the years Enron had actually donated more to the Clinton administration than anyone else.  I guess it makes sense since Clinton was in office for 8 years (8 years that really saw Enron’s rise to power).

That is the reason all of these Senate hearings keep going nowhere. They keep finding too many prominent Democrats every time they turn over a rock.  From what I see, the corruption is very wide spread.  Since Enron had its finger in overseas, I’m suprised I haven’t seen any stink coming in from overseas.  I guess they are better at the old duck and cover. Could be – however Clinton’s power to pardon is no more, and will not return unless Hillary becomes president & Bill somehow manages to get on her good side (if she has one).

I don’t think anyone as ever found a "good side."  She just ain’t made that way. — Jim Hudspeth, CFE, CPA http://survivalworks.com

– *             Ronald Lee Todd M.B.A., C.P.A.                  * *  Unemployed for six years, mistake of being an accountant.  * *   Students, when someone tells you of your great future as  * *       an accountant, ask him to show you the job.           *

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Impact to reverberate from Wall Street to D.C. By Greg Farrell, USA TODAY HOUSTON – Twelve ordinary Texans sent an extraordinary signal to business about responsibility by voting to convict Arthur Andersen of obstruction of justice. But some experts in securities law say they are concerned about the Justice Department’s exercise of raw prosecutorial power and its ability to bring a pre-eminent accounting firm to its knees. <snip Saturday’s verdict could give a boost to advocates of bills aimed at guaranteeing auditor independence. After the trial, two jurors said that Andersen and David Duncan, who led the Andersen audit team, had lost all objectivity in their relationship with Enron. "Andersen got a little too close to Enron," said Jack Gallo, a general manager at an airline. "And David Duncan got way too close to Enron." "There was a lack of auditor independence," David Schwab said. <snip The duo – a soft-spoken New Yorker who can tear witnesses apart on the stand and a rigidly proper Boston Brahmin with a no-nonsense approach – had been successful in prosecuting criminal enterprises, but they were supposedly novices when it came to accounting issues and white-collar crime. Instead of presenting a quick, tight case focusing on Andersen’s shredding of Enron documents in October, the pair prosecuted Andersen like a mob case, trying to weave dozens of disparate facts and arguments into an overwhelming criminal case. The dismissal of Weissmann and Buell as nothing more than mob prosecutors turned out to be the ultimate misjudgment. <snip Buell disagreed with the suggestion that the government had almost blown an easy case. "We never said this case was a lay-down," he told reporters. "We were prosecuting the largest, most resourceful defendant we’d ever faced. Andersen brought every resource to bear to defend themselves in this trial. The government proved its case beyond a reasonable doubt, which is the heaviest burden of fact that you can have." http://www.usatoday.com/money/energy/enron/2002-06-17-andersen.htm — Jim Hudspeth, CFE, CPA   http://survivalworks.com

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Impact to reverberate from Wall Street to D.C. By Greg Farrell, USA TODAY HOUSTON – Twelve ordinary Texans sent an extraordinary signal to business about responsibility by voting to convict Arthur Andersen of obstruction of justice.

And I worry that the signal is "Do what you will, we’ll just get your auditors". — Todd Stephens

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By Greg Farrell, USA TODAY HOUSTON – Twelve ordinary Texans sent an extraordinary signal to business about responsibility by voting to convict Arthur Andersen of obstruction of justice. And I worry that the signal is "Do what you will, we’ll just get your auditors".

Todd, The "fat lady" is nowhere in sight, much less singing.  This thing has years to go.   — Jim Hudspeth, CFE, CPA   http://survivalworks.com

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Impact to reverberate from Wall Street to D.C. By Greg Farrell, USA TODAY HOUSTON – Twelve ordinary Texans sent an extraordinary signal to business about responsibility by voting to convict Arthur Andersen of obstruction of justice. And I worry that the signal is "Do what you will, we’ll just get your auditors".

Andersen wouldn’t be in the crack they are in if they hadn’t shredded their workpapers. Mind you they would be in another crack most likely. I doubt that Enron is "off-the-hook" though. — Paul A. Thomas, CPA Athens,  Georgia http://www.pat-cpa.com

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Andersen wouldn’t be in the crack they are in if they hadn’t shredded their workpapers.

I think this statement is misleading.  I am sure they have filed documented "workpapers" that support the audit opinion in Houston.   Chris

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Andersen wouldn’t be in the crack they are in if they hadn’t shredded their workpapers. I think this statement is misleading.  I am sure they have filed documented "workpapers" that support the audit opinion in Houston.

And I can dig up boxes that support my opinion that Al Capone was a fine upstanding, law abiding, Christian man. Because I have boxes of "workpapers" that support an erroneous opinion, doesn’t make the opinion a correct one.  I truly believe the documents that were shredded weren’t ones that supported the opinion, but ones that pointed to trouble that "should" have caused a different opinion.  Since they’ll never see the light of a court room, we’ll never know how damning they would have been. — Paul A. Thomas, CPA Athens,  Georgia http://www.pat-cpa.com

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A long time ago in a galaxy far far way  "Todd Stephens" And I worry that the signal is "Do what you will, we’ll just get your auditors".

Yeah, I’m afraid you may be right. Sign in a golf pro shop:  "Hail size Golf Balls sold here." —–= Posted via Newsfeeds.Com, Uncensored Usenet News =—– http://www.newsfeeds.com – The #1 Newsgroup Service in the World! —–==  Over 80,000 Newsgroups – 16 Different Servers! =—–

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A long time ago in a galaxy far far way  Jim Hudspeth The "fat lady" is nowhere in sight, much less singing.  This thing has years to go.  

The bottom line is Enron is more politically connected than AA so AA is taking the fall to protect the politically connected Enron.   Check out this link and some others on the net: http://www.onlinejournal.com/Special_Reports/Chin020702/chin020702.html Sign in a golf pro shop:  "Hail size Golf Balls sold here." —–= Posted via Newsfeeds.Com, Uncensored Usenet News =—– http://www.newsfeeds.com – The #1 Newsgroup Service in the World! —–==  Over 80,000 Newsgroups – 16 Different Servers! =—–

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A long time ago in a galaxy far far way  Jim Hudspeth The "fat lady" is nowhere in sight, much less singing.  This thing has years to go. The bottom line is Enron is more politically connected than AA so AA is taking the fall to protect the politically connected Enron.

Political connections are a double edged sword.   In this case the Bush Administration is publicly embarrassed.  In order to survive politically, the Bush crowd will need to PROVE they are not in Enron’s pocket. The DOJ’s lawyers will be far more prepared with Enron than they were with AA.  It will get exceedingly nasty. — Jim Hudspeth, CFE, CPA   http://survivalworks.com

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And I can dig up boxes that support my opinion that Al Capone was a fine upstanding, law abiding, Christian man. Because I have boxes of "workpapers" that support an erroneous opinion, doesn’t make the opinion a correct one.  I truly believe the documents that were shredded weren’t ones that supported the opinion, but ones that pointed to trouble that "should" have caused a different opinion.  Since they’ll never see the light of a court room, we’ll never know how damning they would have been.

I think the evidence in this case would indicate that unlikely, since the pieces of information that showed the internal conflict at Andersen obviously survived to be analyzed I certainly think I have the knowledge to assess the type of records that a large firm would have, and I just can’t think of a situation were "mounds" of evidence would be anything more than extemparaneous client records.  The damning evidence, as proved out here, tends to be emails and memos of internal communication between higher ups discussing high-level accounting issues and the "Andersen" response to this issue.  I imagine that there is well documented support for the substantive balance sheet testing performed by the seniors and staff on this audit and that most of the "shredding" was copies of client records. This is consistent with the "mounds" of documentation of public clients that I audited.   Futhermore, I imagine that most of these SPE accounting issues were discussed at manager level and above for the most part.     It seems like the jury dismissed the "wholesale" shredding also and focused on in house legal/partner communications, and they were in the best position to judge.   Chris

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A long time ago in a galaxy far far way  "Paul A. Thomas" Andersen wouldn’t be in the crack they are in if they hadn’t shredded their workpapers. I think this statement is misleading.  I am sure they have filed documented "workpapers" that support the audit opinion in Houston. And I can dig up boxes that support my opinion that Al Capone was a fine upstanding, law abiding, Christian man.

He would be by the standard set by those in Washington DC. Because I have boxes of "workpapers" that support an erroneous opinion, doesn’t make the opinion a correct one.  I truly believe the documents that were shredded weren’t ones that supported the opinion, but ones that pointed to trouble that "should" have caused a different opinion.  Since they’ll never see the light of a court room, we’ll never know how damning they would have been.

Since the papers were shredded the world may never know what was on them. Sign in a golf pro shop:  "Hail size Golf Balls sold here." —–= Posted via Newsfeeds.Com, Uncensored Usenet News =—– http://www.newsfeeds.com – The #1 Newsgroup Service in the World! —–==  Over 80,000 Newsgroups – 16 Different Servers! =—–

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In this case the Bush Administration is publicly embarrassed.  In order to survive politically, the Bush crowd will need to PROVE they are not in Enron’s pocket.

Enron was also incredibly *clumsy* with their attempt to use their influence–that is, they were not subtle at all, and that made it important for those that received paymemts to distance themselves from the enterprise.  And now those who had the clout and need the protection no longer are in a position to provide money–meaning they probably *do* need to watch out.

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I think the evidence in this case would indicate that unlikely, since the pieces of information that showed the internal conflict at Andersen obviously survived to be analyzed

As I remarked early on, my first response as a partner in a CPA firm to the shredding was simply–what in the *world* was Duncan thinking by allowing that to go on and apparently encouraging it?  I mean, I keep looking for a potentially positive outcome for either Andersen or Duncan that could have resulted from that shredding and I simply don’t find it. I suppose it’s *possible* there was something really, really awful that got destroyed and which there is no trace of now because all the other shredding covered it up.  But with Andersen out of business and Duncan now with a felony conviction on his record, it’s really difficult to figure just what that something could have been that would have ended up with a worse result for either Duncan or the entity.

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As I remarked early on, my first response as a partner in a CPA firm to the shredding was simply–what in the *world* was Duncan thinking by allowing that to go on and apparently encouraging it?  I mean, I keep looking for a potentially positive outcome for either Andersen or Duncan that could have resulted from that shredding and I simply don’t find it. I suppose it’s *possible* there was something really, really awful that got destroyed and which there is no trace of now because all the other shredding covered it up.  But with Andersen out of business and Duncan now with a felony conviction on his record, it’s really difficult to figure just what that something could have been that would have ended up with a worse result for either Duncan or the entity.

The certainly made very poor decisions.   I just have a hard time believing that there were voluminous amounts of incriminating documentation.  Situations like these are much more subtle than that and likely wouldn’t involve any lower level personnel.   Even if you believe that there was something nefarious going on with this job, the Partner certainly wasn’t sharing it with the staff people or have them handling documentation that would indicate wrong-doing.  It just doesn’t make any sense to me. And the lower level personnel are the people that create the volumes of audit documentation.   Chris

Response:

Political connections are a double edged sword. In this case the Bush Administration is publicly embarrassed.  In order to survive politically, the Bush crowd will need to PROVE they are not in Enron’s pocket.

I don’t think it is just Bush.  The last I heard was that Enron had donated to just about every politician they could from both parties.  I think there will be some embarrassment avoidance all around on this one.  In fact, I had *heard* (can’t confirm this myself) that over the years Enron had actually donated more to the Clinton administration than anyone else.  I guess it makes sense since Clinton was in office for 8 years (8 years that really saw Enron’s rise to power). — Todd Stephens

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And the lower level personnel are the people that create the volumes of audit documentation.  

As I remember from my auditing days, it was the "lower level" people (like me) that were in a better position to "see" things that might not be right.  And if I remember, it was my job to point out to the senior auditors the problem I thought existed, and it was the senior auditors job to tell the audit partner, and so on and so forth.  SO, my "volumes" of work papers might contain some evidence that a serious problem was detected and brought to the attention of the audit managers and higher-ups.  OR, the volumes of work papers could just be recipes that were swapped between audit staffers, who knows. — Paul A. Thomas, CPA Athens, Georgia http://www.pat-cpa.com

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