Ex-Andersen Auditors of Enron Cited

When seven accountants for the now-defunct firm audited part of Enron's 1997 financials, they allegedly didn't consolidate the statements of two su...
Stephen TaubNovember 4, 2005

The Texas accounting board is trying to take disciplinary action against seven former Arthur Andersen accountants for their role in Enron’s collapse, according to The Houston Chronicle.

In a complaint filed Thursday with the state’s Office of Administrative Hearings, the Texas State Board of Public Accountancy in Austin contends that the former Andersen accountants were involved in conducting audits for Enron and its subsidiaries before the company’s collapse, according to the report.

The board charged that when the accountants for the now-defunct firm audited part of Enron’s 1997 financials, they didn’t consolidate the statements of two subsidiaries into the parent company’s audit as accounting rules require, according to the Associated Press. The complaint against the Andersen accountants added that the firm later changed the documents after being notified by the Securities and Exchange Commission.

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The two subsidiaries, Chewco and Jedi, were among the special-purpose entities run by then-CFO Andrew Fastow that figured prominently in Enron’s demise.

The complaint further stated that the seven CPAs shouldn’t have relied on Enron management’s word and accused the accountants of not following proper procedures, according to the AP.

The accountants, who face possible suspension or revocation of their state accounting licenses, are Thomas Bauer, Carl Bass, Patricia Grutzmacher, James Brown, Jennifer Stevenson, Derek Claybrook, and Andrew Schuleman.

The AP reported that a phone message for the accountants’ lawyer, Rusty Hardin, wasn’t returned immediately.