Piling on Arthur Andersen

Texas State BofA.gifIt’s looking as if the Texas State Board of Accountancy needs to catch up with the government’s investigation into Enron. In this Chronicle article, John Roper and Purva Patel report that the Texas state accounting board is seeking disciplinary action against seven former Arthur Andersen accountants for allegedly failing to scrutinize and report financial events that led to the collapse of Enron. The state board’s press release is here and a copy of the complaint is here.
But wait a minute. Hasn’t the state board staff checked in with the Enron Task Force recently? The board’s complaint is rather dated — indeed, it is based on many of the same allegations that the Enron Task Force made in 2002 when it demonized Arthur Andersen and its partners and improperly prosecuted the firm out of business. But now, faced with the realization that it actually will have to attempt to prove its amorphous charges against former Enron executives Ken Lay, Jeff Skilling and Richard Causey, the Task Force has done a 180 degree turn and is contending that the Arthur Andersen partners were duped by Enron just like everyone else (sorry about the prior misunderstanding, Andersen). Wouldn’t it be the ultimate irony if the former Andersen partners call as witnesses in defending themselves against the board’s complaint members of the same prosecution team that prosecuted their firm out of business?
By the way, the best reflection of the absurdity of the Board’s complaint is that former Andersen partner Carl Bass was included as a defendant. As anyone with even a passing understanding of the Enron case knows, Mr. Bass was a sometimes lone voice of skepticism and reason regarding aggressive accounting positions that Enron management sought to take in regard to various transactions.

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