Return to Transcripts main page

CNN Live At Daybreak

Fired Enron Auditor Before Congress

Aired January 17, 2002 - 05:15   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: And in the Enron investigation, the senior Arthur Andersen auditor fired for destroying Enron documents says he was following the advice of the accounting firm's lawyers. David Duncan was interviewed yesterday by congressional investigators looking into the collapse of the energy giant and the evidence of a cover-up at Arthur Andersen. He's the guy in the white shirt, by the way.

The accounting scandal at Arthur Andersen has called into question the integrity of the nation's entire accounting industry.

CNN Financial News correspondent Allan Chernoff looks at what's being done to audit the auditors.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Damage control is now the operative phrase not only for Andersen, but also for the entire accounting industry. The Securities and Exchange Commission is trying to avoid a crisis of confidence in financial standards. SEC Chair Harvey Pitt is working with top accountants to develop a new system for overseeing auditors.

JOSHUA RONEN, NEW YORK UNIVERSITY: I would think that the confidence would have been shaken to a larger extent and it would not be restored without some drastic reform.

CHERNOFF: In full page newspaper ads, Andersen promised it will soon announce ``comprehensive changes in our practices and policies.''

The Treasury Department is also prodding for change. Treasury Undersecretary Peter Fisher Wednesday said new rules should be written if loopholes were used to help Enron. And he reiterated his call for better financial disclosure: ``While developments in our capital markets, corporate finance and risk management are racing along at 100 revolutions per minute, the evolution of our accounting and disclosure regime crawls along at 10 RPM, and the gap between them is forever widening. If I sound a little frustrated, I am.''

Beyond the question of disclosure, another hot issue: whether accountants should be permitted to engage in consulting for clients.

IRA SORKIN, FORMER N.Y. SEC ADMINISTRATOR: If there's a suspicion that the financial statements of publicly traded corporations are not accurate or misleading, that could have a very serious impact on the entire financial market structure.

CHERNOFF (on camera): Money managers and accounting experts agree nothing less than the integrity of the nation's financial markets is at stake because after all, when investors buy a stock, they do so with the belief that the company's financial statements are accurate.

Allan Chernoff, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: And we do keep hearing report after report about how little is left of Enron. But the picture we're about to show you proves that's not exactly true. There is some green left, not money per se, but plants. Since the company is no longer paying for its indoor gardening service, employees have been invited to buy plants that were in their offices. So it seems there is some growth potential remaining inside Enron. I can't believe they're making the employees pay for the plants.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com