In response to repeated questions about why Andersen did not include concerns about Enron in its audit Berardino argued that under current rules ‘we can only issue a standard audit form.’
One member argued that Andersen could have refused to pass the client’s audit. Andersen says it wants to be able to grade audits rather than issue a simple pass or fail.
When asked about Andersen’s involvement with some Enron’s special purpose vehicles Berardino said: ‘We are aware of transactions and we gave judgments. We said no a lot and then we said yes. We did not structure these deals we gave our opinion on the right accounting.’
Berardino said that most of these types of partnerships are ‘benign’ but that he does not agree with the rules governing them. He suggested that rather than giving shareholders ‘too much data rather than information’ by enforcing disclosure of all SPV’s, new rules should allow judgment on when to disclose.
On investigator asked if the Big Five are too big since Berardino could just sit there and keep answering with ‘I don’t know’. ‘I don’t think we’re too big (..) you can’t deny human nature. People will make bad judgments,’ he answered.
Berardino also insisted that David Duncan, the Andersen partner sacked for his role in the enron affair, is not being set up as the ‘fall guy’.
Berardino said yesterday that failure to give important information to auditors should be a crime. The subcommittee will write to Berardino with questions that were not cleared up yesterday.
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