Morgenson on Arthur Andersen

["Tom Walker" <timework@xxxxxxxxx>]

A Bubble That Enron Insiders and Outsiders Didn't Want to Pop

http://www.nytimes.com/2002/01/14/business/14ENRO.html?todaysheadlines

"Mr. Fleckenstein and some other investors are concerned that other bombs like Enron's may be ticking, but that investors will have little help in spotting them before they blow. The combination of aggressive accounting — like Enron's method of shifting big obligations off its balance sheet — and a conflicted auditing firm, he said, are not limited to Enron. Aggressive accounting has become much more common in recent years, and as auditors have increased their consulting business among the companies whose books they vet, their willingness to sign off on debatable practices has grown.

"And as investors know only too well, analysts on Wall Street cannot be relied upon to dig deeply into companies' books. Eager to help their firms generate business selling securities to investors — and reap their own rewards in bonuses — Wall Street analysts have made a habit of missing corporate misdeeds altogether or ignoring what they see.

"'Enron proves how meaningless financial statements have become,' Mr. Fleckenstein said. 'Until someone makes sure that financial statements have meaning, we will never get this problem behind us.'"

Tom Walker