Last I heard there were 65,000 people working for Andersons. IMHO, it's a dumb decision to say that Anderson's is to blame for this. There were a few people that clearly set out to lie, cheat, and cover up the truth. If one person in your company (assuming you work for one) were to carry out a fraudulent act, would you be happy to be tarred with the same brush as them? Become a Complete Fool
No good will come from this decision.
This is a rabble rousing statement that has no basis in fact. What is going on right now and will continue independent of SEC action? Most corporations that have Anderson as an auditor are shopping for new auditors, so that their stockholders will have faith in their SEC filings, earnings statements, and annual reports.
Companies that are pressuring their (non-Anderson) auditors to okay their shady practices have been put on notice by their auditors to mend their ways. Companies currently using Anderson as auditors and practicing the same type of shady accounting will not be able to find a new auditor until they agree to "take a bath" when a new auditor takes over. I am sure that the accounting statements will show numbers under the old and new accounting practices, and that is a good thing. Remember, all the SEC cares about is getting real information about risks to stockholders (owners) of a company. Some investors are risk-adverse, others are not. There is room for lots of different management philosophies in the corporate world. The only one that needs to be stamped out is the screw the stockholders and steal their money philosophy that we saw at Enron and a few other companies.
But what about all those Anderson jobs? Most of those employees will find jobs at other accounting firms that now have need of more auditors to deal with all the new business coming from former Anderson customers. Some Anderson employees will be tarred with the 'you should have known' brush. Will it happen to many innocent people? I doubt it. Will it happen to some people whose hands were only slightly dirty? Of course. But in general, the market is self correcting, and this is part of that correction.
And what about all those poor, innocent Anderson stockholders? Sorry, there are none. Even before the Enron scandal broke, Anderson was getting such a smelly reputation that if a company switched to Anderson as an auditor, that rated a good reexamination of the fundamentals of the company if you held the stock. If you invested in Anderson itself you had to hold your nose to do it...
What is the right standard for major corporate auditors? Very simple. Ask yourself two questions: If I had a major part of my wealth invested in this company would I want to know about this? And could this possibly have a major impact on the value of the company? If the answer to just one or the other is yes, including the information in the financial statements involves a lot of judgment. If both answers are yes, there should be no question of judgment. In fact, it shouldn't wait for the next quarterly statement, but go out in a press release, then in a supplemental filing with the SEC. Honest companies do this all the time, look at the two separate announcements on the UMC deal by AMD. First on the issue of the bonds, then on the joint enterprise. Companies need to be able to set up such deals in private, but once the agreement is signed, you announce it to all the shareholders. If it is not good news, all the more reason for getting the word out quickly.
This is why I wasn't upset about AMD's late warning for 2Q02. They announced the agreement to settle with Alcatel before the ink was dry and the effect on earnings a couple of days later. The fact that this happened over the end of the quarter weekend meant that the warning actually occurred after the quarter was over. My guess at the time was that AMD and Alcatel didn't want those footnotes in their earnings reports, and that AMD waited a day or so to talk to their other flash customers and get all the impact together in one warning.
On the other hand, did I think that AMD should have been worried about deals signed with Alcatel's US subsidiary having the full backing of the parent company? Of course. Should AMD have used the leverage they had when the flash market was tight to get that concession? You be the judge. We will see if AMD gains any benefit from their generosity as the flash business picks up, but I doubt it.
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Last I heard there were 65,000 people working for Andersons. IMHO, it's a dumb decision to say that Anderson's is to blame for this. There were a few people that clearly set out to lie, cheat, and cover up the truth. If one person in your company (assuming you work for one) were to carry out a fraudulent act, would you be happy to be tarred with the same brush as them?
Become a Complete Fool