Re: [CANSLIM] Another Andersen client

From: Spencer48@aol.com
Subject: Re: [CANSLIM] Another Andersen client
Date: Mon, 28 Jan 2002 22:18:40 EST

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Mike:

     I agree.  Anderson cannot be held accountable (no pun intended) for 
Enron's lousy economic plan or planning.  

     However, not only is their an apparent conflict of interest when the 
auditor is also a consultant, but also it is difficult to believe that the 
consultants at Anderson and the auditors at Anderson do not speak to each 
other.  

     The upshot is that an incentive is given to the auditor to not 
scrutinize Enron (so Anderson continues to get the Anderson Auditing 
Account), and to the consultant to bamboozle the auditor the best he can.  So 
each has a motivation to not accurately reflect the financial condition of 
Enron.  And, of course, their motivation is magnified by the pressure 
elicited by the fees and commission paid out to Anderson which employs each 
of them.

     This sort of fraud can affect the capital markets so that people can 
become afraid to invest in the stock market because they feel the markets are 
not run on the square.  If that happens, and the little investor no longer 
buys stock (either on the retail level or in mutual funds), then market is in 
for a definite swoon. 

jans 

In a message dated 1/28/2002 9:29:10 PM Eastern Standard Time, 
mikegibbons@proactech.com writes:

<< The implication of your post is that bankruptcies are somehow linked to the
 auditor but I find that a bit of a stretch, despite the circumstantial
 evidence you cite. Management and the Board, together with market
 conditions, must surely bear the responsibility for a company going
 belly-up. The Auditors role is not to tell management where their policies
 may lead the company to failure, in fact questioning management is something
 they are loath to do. Andersens would appear to have failed in their
 fiduciary responsibility to shareholders in the Enron case (although I think
 we should consider them innocent until proven guilty), but I have seen no
 evidence that in doing so they contributed to Enron's collapse. >>

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