Andersen Case

Andersen not only performed the external financial statement audit for Enron, but also took a part in Enron's internal audit functions; this implies that Andersen is directly related to Enron audit committee. By the fall of Enron; the board of directors, including the audit committee have considered taking action in order to prevent it. According to Skilling's resignation; Sherron Watkins, Enron vice president of corporate development, has sent the letter to Kenneth Lay, previous CEO, to be back on seat since she noticed the personal reason of Skilling's resignation was not a fun story. As later, she was rewarded as a loyal employee trying to save the company. Apart from that, it appears that Andersen also knew about Enron's problems almost a year before the fall. Andersen did consider dropping Enron as a client by sending email to Andersen partner to David Duncan, in charge of the Enron's Audit; mentioning on Fastow's conflicts of interest in his roles and responsibilities at LJM, one of Enron' Special Purpose Entities(SPE's). In the email, there was the suggestion that special committee of the board of directors to be established to review the fairness of LJM transaction. Since Enron was the largest client of Andersen; high risk to hold, as the obvious sign of independence with SPE's, this sharpened up the risks that causes from bias to fraud, and that would put Andersen in trouble of in charge too. Ironically; even Andersen have known this appearance risk, Andersen still alleged to the obstruction of justice for destroying documents, (Enron-related audit workpapers and documents) which later was admitted by Duncan. But he claimed that he ordered the destruction because the email he received from Andersen's counsel reminding him of the company document retention.