Arthur Andersen’s Audit Standards Pass Review

Arthur Andersen, the auditor of Enron Corp., said it received unqualified good marks from its peer reviewer, Deloitte & Touche, after what Andersen called “the most extensive peer review in the firm’s history.”

Andersen said that Deloitte’s review of 240 of its audits for the year ended Aug. 31 found “reasonable assurance” that the firm’s quality control standards comply with professional standards.

Andersen, the fifth-largest accounting firm, had asked Deloitte for additional scrutiny because of financial reporting issues at Enron. Deloitte & Touche said it independently determined to conduct additional checks in light of the collapse of Enron, which filed last month for the biggest bankruptcy protection in U.S. history after saying it overstated earnings.

Andersen’s last review, in 1998 by Deloitte, the third-largest accounting and consulting firm, didn’t report any problems. Deloitte & Touche declined immediate comment on the latest review.

The Public Oversight Board, an accounting industry oversight group, plans to look at the adequacy of the peer review system as a result of the failed Enron audits. The system puts some of a firm’s reports on public companies under scrutiny by other accounting firms in an effort to assure investors the firm’s methods comply with professional standards.

The oversight board also dispatched three or four auditors from its staff to monitor Deloitte & Touche’s peer review of Andersen.

“We’re looking at the systems and specific areas affected by the Enron type of business,” board Chairman Charles Bowsher said in an interview last month. “A lot of people get hurt when an Enron happens.”