The Accounting Firm
However, Andersen’s independence was called into question. The accounting firm was one of Enron’s major business partners, with more than 100 employees dedicated to its account, and it sold about $50 million a year in consulting services to Enron. Some Andersen executives even accepted jobs with the energy trader. In March 2002, Andersen was found guilty of obstruction of justice for destroying relevant auditing documents during an SEC investigation of Enron. As a result, Andersen was barred from performing audits. The damage to the firm was such that the company no longer operates, although it has not been dissolved formally.
It is still not clear why Andersen auditors failed to ask Enron to better explain its complex partnerships before certifying Enron’s financial statements. Some observers believe that the large consulting fees Enron paid Andersen unduly influenced the company’s decisions. An Andersen spokesperson said that the firm looked hard at all available information from Enron at the time. However, shortly after speaking to Lay Vice President Sherron Watkins took her concerns to an Andersen audit partner who reportedly conveyed her questions to senior Andersen management responsible for the Enron account. It is not clear what action, if any, Andersen took.
