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Restaurant franchiser charges defunct auditor with GAAP and audit-standards breaches.
Stephen Taub, CFO.com | US
September 8, 2004
The ghost of Arthur Andersen still manages to come to life every so often.
The most recent example: The folks at AFC Enterprises have sued the former accounting giant, two of its former partners, and a former audit manager.
AFC Enterprises, known its for Popeyes, Chicken & Biscuits, Church's Chicken, and Cinnabon franchises, alleges the defendants violated generally accepted auditing standards and accounting principles, committed auditing malpractice, and breached contracts between the parties. Those violations caused AFC to restate two years of financial statements and incur substantial costs, fees, and lost profits, the company charged.
AFC, which filed the suit in the Superior Court of Fulton County, Georgia, also seeks fees it paid the now-defunct auditor from 2000 to 2002, according to the Associated Press, which cited the lawsuit.
AFC also wants Andersen and three of its former accountants to reimburse it for the sums it shelled out to lawyers and other accountants to get its financials in shape. It is also seeking unspecified monetary damages, according to the report.
"We relied on Arthur Andersen to tell us if we had violated any generally accepted accounting procedures and standards, and they did not do that," Neal Pope, whose law firm represents AFC, told the wire service.
Patrick Dorton, an Arthur Andersen spokesman, told the wire service he had not seen the lawsuit and declined to comment.
The AP added that none of the accountants named in the suit could be reached for comment.