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.
“We’ve 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 who’d been associated with Oberlin for all of 25 years,” Evans said. “About 3 years ago he retired. Since then we’ve 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.”
Andersen’s Cleveland office declined to comment to the Review. The firm’s Great Lakes regional manager Louis Grabowsky told The Plain Dealer that his company’s clients “are appropriately concerned and asking the tough questions. And we are addressing those questions through our people.”
Oberlin’s decision is merely a small part of a large trend. A growing number of Arthur Andersen’s 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 Andersen’s 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, there’s 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 can’t 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 didn’t have to. Now we’re looking at what other colleges in the area are using.”

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