Andersen awaits decision on New York work
Andersen's kudos came under more pressure yesterday as NYC hauled the firm in for a review, as another bankrupt audit client, Global Crossing, defended its accounting methods.
New York City’s comptroller William Thompson summoned Andersen to meet his staff yesterday afternoon to evaluate if he should strike the firm off an approved accountant list followed by city agencies. Thompson described the meeting as ‘productive’ but has not made a decision.
Andersen would not directly lose revenue as a result, but an adverse decision would not be a popularity booster. The Bush administration is already reviewing the firm’s status at its agencies. Companies are less ready to comment on their views about the auditor.
However, bankrupt client Global Crossing yesterday dismissed allegations of -inflated revenue’ and ‘intentionally misleading accounting’ made by an ex-employee Roy Olofson last year. It said Olofson, threatened to file a lawsuit unless the company gave him a pay-off.
Joe Perrone, the operator’s executive VP of finance conceded Global Crossing’s financial reporting was ‘not black and white’ to investors but he insisted that it is ‘in accordance with generally accepted accounting practices’.
He credited the allegations to a ‘lack of understanding’ of an accounting change last year that brought GAAP revenue to ‘negligible” levels’. The SEC, Andersen and Global Crossing gave the change a lot of attention last year, Perrone added.
Andersen’s Berardino has had letters defending the firm printed in the Wall Street Journal, New York Times and Washington Post.