Thursday, March 31, 2005
What exactly was Arthur Andersen's role in the problems of WorldCom? The answer to this question may be forthcoming as civil litigants are proceeding against Andersen for an alleged failure to question issues at WorldCom. According to the Wall Street Journal, "Andersen denies that it failed in its responsibility to audit WorldCom's books properly from April 1999 through June 2002, and says it was defrauded, along with investors." Looking at this statement in light of the recent conviction of Bernard Ebbers, former CEO of WorldCom, one has to wonder several things: Was the CEO manipulating the accountants? Were the accountants failing to provide information to the CEO of what underlings were doing in the company? Were the accountants failing to provide sufficient transparency to the outside world of what was happening at the company?
The bottom line is that there is a problem somewhere, and someone is going to have to take the blame.