After
50 Years and Enron Fiasco, Oberlin Leaving Auditor Following Enron
by Greg Walters
After
a financial relationship that spanned half a century, Oberlin
College and Arthur Andersen, the auditing firm now notorious for
its
murky role in the collapse of Enron Corporation, are going their
separate ways.
Weve never had any complaint about the actual audit
or quality of their work, College president Nancy Dye said.
But in the wake of the Enron crash for which Andersen may be held
accountable, we have begun to worry about the future of the
firm, she said.
Arthur Andersen is being investigated in connection with allowing
the Houston based energy giant Enron to hide more than a billion
dollars in debt.
While the sins of the auditors in Houston should not be visited
on the auditors in Cleveland or wherever, Vice-President of
Finance Andrew Evans said. The integrity of the company has
been not shattered but certainly challenged.
Administration officials stress that the decision is not based entirely
on the Enron fiasco. We had a partner at Arthur Andersen whod
been associated with Oberlin for all of 25 years, Evans said.
About 3 years ago he retired. Since then weve had a
lot of young auditors come through, and the firm began to put some
pressure on us in terms of reducing liability, he said.
Reduced liability would make Arthur Andersen legally exempt for
any accounting irregularities at Oberlin. Since institutional auditing
is essentially the process of making sure an organization is economically
sound by checking the quality and integrity of its accounting
and generally making sure the numbers add up such a move
would be like exempting a doctor in the event of malpractice,
Associate Vice President of Finance Ron Watts said.
When Oberlin balked at the agreement, relations cooled,
Evans said. Then Enron hit.
Andersens Cleveland office declined to comment to the Review.
The firms Great Lakes regional manager Louis Grabowsky told
The Plain Dealer that his companys clients are appropriately
concerned and asking the tough questions. And we are addressing
those questions through our people.
Oberlins decision is merely a small part of a large trend.
A growing number of Arthur Andersens clients, such as SunTrust
Banks Inc., Merck & Co., Delta Airlines and FedEx Corp., have
recently announced their plans to drop the firm. The New York Times
reports that even New York City may revoke Andersens status
as one of the many auditing firms approved for use by the city.
What we have here is a run on the bank because everyone else
is
running, Paul Volcker, the former Federal Reserve chairman
now leading a special oversight board on Andersen, told The New
York Times. If everybody leaves, theres no firm left.
There is no word yet on who the college might turn to as a replacement,
although the administration says it would like to find an auditing
firm with more nonprofit and educational experience.
Nonprofit institutions have a more complex internal structure
than
for-profits do, Watts said. Colleges and universities
have more
restrictions in terms of how they can spend their money. For instance,
if
someone gives us money for a specific purpose, we cant just
use it for
something else.
Andersen typically does not handle non-profit groups. Although the
firm declined to comment on the nature of its clientele in the Great
Lakes region, The Plain Dealer reports it is primarily utilities,
manufacturers and retailers.
Other colleges generally change firms every few years, to
keep fees low, Evans said. We had such a good relationship
with our old partner, we didnt have to. Now were looking
at what other colleges in the area are using.
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