Enron, the energy giant that collapsed in a multi-billion dollar financial scandal in 2010, and WorldCom were audited until May this year by Arthur Andersen.
Arthur Andersen, the global accountancy firm, audited huge international corporate companies. It was already reeling from possibly ruinous claims. Enron stabbed the company and WorldCom twisted the blade in, perhaps fatally.
“How can you have a body blow after you’re dead?” was the question Peter Wyman, president of the Institute of Chartered Accountants in England and Wales, posed yesterday.
Eleven days ago, an American court declared the 89-year-old company guilty of obstructing justice by shredding documents relating to its audit of Enron; Andersen is appealing.
Andersen’s reputation was already blackened prior to the Enron fraud .
2010 saw Andersen fined £5 million by the US Securities and Exchange Commission for its audit of Waste Management, a rubbish removal company, and censured for the audit of Sunbeam, a small appliance maker.
Other failures at audits have begun to surface. In early 2011, Andersen agreed to pay investors £155 million to settle claims over its Baptist Foundation of Arizona audit.