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CNN Live At Daybreak

Andersen Taps Former Fed Chairman for Oversight

Aired February 04, 2002 - 06:47   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: The Andersen accounting firm will undergo a major review of its business practices in the wake of the Enron scandal. As CNN's Alan Chernoff reports, the company has tapped a former Fed chairman to head the Oversight Board.

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ALAN CHERNOFF, CNN CORRESPONDENT (voice-over): Andersen's reputation severely tarnished, the Enron auditor is turning for help to someone with a sterling reputation. Paul Volcker, former chairman of the Federal Reserve, will head an independent Oversight Board with a mission to fix Andersen's auditing.

PAUL VOLKER, CHAIRMAN. ANDERSEN OVERSIGHT BOARD: I can remember when Arthur Andersen, a made-in-America auditing firm, accounting firm, was considered the cream of the crop. And I would like to see Andersen return to leadership in the industry.

CHERNOFF: Andersen chief executive, Joseph Berardino, says his firm intends to rebuild its image by improving the quality of its work.

JOSEPH BERARDINO, CEO, ARTHUR ANDERSEN: This is not window washing or eye wash. This is not something that just looks good and you know, months later you get a report that says nothing. This is about helping us come up with answers to fundamental questions about what the American public expects from an auditing firm.

CHERNOFF: Andersen's reputation suffered another blow Saturday. An Enron internal investigation, led by new board member, William Powers, found Andersen at fault for signing off on investment partnerships that led to the company's downfall. The Powers report concluded, "Andersen did not fulfill its professional responsibilities."

Andersen shot back at the report in a statement: "It does not reflect an independently credible assessment of the situation, but instead represents an attempt to insulate the company's leadership and the board of directors from criticism by shifting blame to others."

Mr. Berardino declined further comment.

BERARDINO: There is plenty of time to respond to what may have happened. CHERNOFF (on camera): Indeed, Mr. Berardino will get plenty of time in front of Congress. He is scheduled to testify before a House subcommittee on Tuesday.

Alan Chernoff, CNN Financial News, New York.

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