|
APPENDIX A: Corporations Embroiled in Scandal and Fees Paid to Accountants
|
|
Fees in millions ($)
|
2000
|
% of fees for consulting
|
2001
|
% of fees for consulting
|
Accountant
|
Scandal in Brief
|
|
Adelphia Communications
|
$ 3.5
|
62%
|
n/a
|
n/a
|
Deloitte & Touche
|
Investigations by the SEC and 2 grand juries
|
|
auditing
|
1.3
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
2.2
|
|
n/a
|
|
|
|
|
Bristol Myers Squibb
|
25.7
|
89%
|
41.3
|
93%
|
PricewaterhouseCoopers
|
Under investigation by the SEC
|
|
auditing
|
2.8
|
|
2.7
|
|
|
|
|
non-audit and consulting
|
22.9
|
|
38.6
|
|
|
|
|
Cendant Corp.
|
27.9
|
80%
|
32.4
|
79%
|
Deloitte & Touche
|
Former Chairman indicted for accounting scheme
|
|
auditing
|
5.6
|
|
6.9
|
|
|
|
|
non-audit and consulting
|
22.3
|
|
25.5
|
|
|
|
|
CMS Energy
|
3.9
|
60%
|
5.6
|
71%
|
Arthur Anderson
|
Embroiled in energy trading/accounting scandal
|
|
auditing
|
1.6
|
|
1.6
|
|
|
|
|
non-audit and consulting
|
2.3
|
|
3.9
|
|
|
|
|
Computer Associates International
|
2.9
|
42%
|
n/a
|
n/a
|
KPMG
|
Paid fine to Justice Dept, under investigation by SEC
|
|
auditing
|
1.7
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
1.2
|
|
n/a
|
|
|
|
|
Dollar General Corp.
|
1.4
|
7%
|
1.3
|
8%
|
Ernst & Young
|
settled a class-action lawsuit for $162 million for accounting problems
|
|
auditing
|
1.3
|
|
1.2
|
|
|
|
|
non-audit and consulting
|
0.1
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.7
|
67%
|
Deloitte & Touche was dismissed as the auditor in September 2001
|
|
|
auditing
|
0.2
|
|
|
|
|
|
|
non-audit and consulting
|
0.5
|
|
|
|
|
|
|
Duke Energy
|
15.2
|
78%
|
15
|
78%
|
Deloitte & Touche
|
Investigations by the SEC, CFTC over trading and accounting problems.
|
|
auditing
|
3.4
|
|
3.3
|
|
|
|
|
non-audit and consulting
|
11.8
|
|
11.7
|
|
|
|
|
Dynegy
|
7.3
|
56%
|
8.0
|
59%
|
Arthur Anderson
|
Investigations by the SEC, CFTC over trading and accounting problems.
|
|
auditing
|
3.2
|
|
3.2
|
|
|
|
|
non-audit and consulting
|
4.1
|
|
4.7
|
|
|
|
|
El Paso
|
5.9
|
68%
|
12.3
|
65%
|
PricewaterhouseCoopers
|
Embroiled in energy trading/accounting scandal
|
|
auditing
|
1.9
|
|
4.3
|
|
|
|
|
non-audit and consulting
|
4.0
|
|
8.0
|
|
|
|
|
Enron
|
52.0
|
52%
|
n/a
|
n/a
|
Arthur Anderson
|
Took advantage of lax regulations to defraud consumers & investors
|
|
auditing
|
25.0
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
27.0
|
|
n/a
|
|
|
|
|
Global Crossing
|
14.2
|
84%
|
n/a
|
n/a
|
Arthur Andersen
|
Under investigation by the FBI and SEC for accounting fraud.
|
|
auditing
|
2.3
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
12.0
|
|
n/a
|
|
|
|
|
Halliburton
|
51.5
|
86%
|
26.5
|
73%
|
Arthur Anderson
|
In May the SEC began investigating Dick Cheney's role in $100 million in accounting problems.
|
|
auditing
|
7.4
|
|
7.2
|
|
|
|
|
non-audit and consulting
|
44.1
|
|
19.3
|
|
|
|
|
IMClone Systems
|
0.2
|
63%
|
0.4
|
58%
|
KPMG
|
CEO arrested for insider trading, Martha Stewart also under investigation.
|
|
auditing
|
0.1
|
|
0.2
|
|
|
|
|
non-audit and consulting
|
0.1
|
|
0.2
|
|
|
|
|
Kmart
|
12.8
|
91%
|
Filed for bankruptcy 8 days before they would have been required to disclose for 2001
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
1.1
|
|
|
|
|
|
|
non-audit and consulting
|
11.7
|
|
|
|
|
|
|
Lucent Technologies
|
Did not disclose for 2000
|
62.6
|
88%
|
PricewaterhouseCoopers
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
|
|
7.6
|
|
|
|
|
non-audit and consulting
|
|
|
55.0
|
|
|
|
|
Martha Stewart Living Omnimedia
|
1.0
|
69%
|
0.8
|
64%
|
Arthur Andersen
|
Martha Stewart is under investigation by the SEC for insider trading.
|
|
auditing
|
0.3
|
|
0.3
|
|
|
|
|
non-audit and consulting
|
0.7
|
|
0.5
|
|
|
|
|
Merck & Co
|
6.3
|
33%
|
6.5
|
34%
|
Arthur Andersen
|
Shareholder lawsuits concerning accounting problems.
|
|
auditing
|
4.2
|
|
4.3
|
|
|
|
|
non-audit and consulting
|
2.1
|
|
2.2
|
|
|
|
|
MicroStrategy
|
2.1
|
62%
|
1.4
|
36%
|
PricewaterhouseCoopers
|
Settled a suit brought by the SEC for accounting fraud.
|
|
auditing
|
0.8
|
|
0.9
|
|
|
|
|
non-audit and consulting
|
1.3
|
|
0.5
|
|
|
|
|
Mirant
|
13.5
|
84%
|
13.1
|
77%
|
Arthur Anderson
|
Embroiled in energy trading/accounting scandal
|
|
auditing
|
2.2
|
|
3.0
|
|
|
|
|
non-audit and consulting
|
11.3
|
|
10.1
|
|
|
|
|
Network Associates
|
5.0
|
71%
|
4.0
|
61%
|
PricewaterhouseCoopers
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
1.5
|
|
1.6
|
|
|
|
|
non-audit and consulting
|
3.5
|
|
2.4
|
|
|
|
|
Peregrine Systems
|
1.0
|
82%
|
n/a
|
n/a
|
Arthur Andersen
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
0.2
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
0.9
|
|
n/a
|
|
|
|
|
PNC Financial Services Group
|
19.1
|
85%
|
18.8
|
79%
|
Ernst & Young
|
Forced to restate $155 million after SEC investigated.
|
|
auditing
|
2.9
|
|
3.9
|
|
|
|
|
non-audit and consulting
|
16.2
|
|
14.9
|
|
|
|
|
Qwest Communications
|
7.9
|
86%
|
11.8
|
89%
|
Arthur Andersen
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
1.1
|
|
1.4
|
|
|
|
|
non-audit and consulting
|
6.8
|
|
10.5
|
|
|
|
|
Reliant Energy
|
22.1
|
84%
|
33.2
|
87%
|
Deloitte & Touche
|
Embroiled in energy trading/accounting scandal
|
|
auditing
|
3.6
|
|
4.3
|
|
|
|
|
non-audit and consulting
|
18.5
|
|
28.9
|
|
|
|
|
Rite Aid
|
20.6
|
50%
|
7.9
|
37%
|
Deloitte & Touche
|
Indicted by the SEC for accounting fraud.
|
|
auditing
|
10.4
|
|
5.0
|
|
|
|
|
non-audit and consulting
|
10.2
|
|
2.9
|
|
|
|
|
Tyco
|
n/a
|
n/a
|
34.9
|
62%
|
PricewaterhouseCoopers
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
n/a
|
|
13.2
|
|
|
|
|
non-audit and consulting
|
n/a
|
|
21.7
|
|
|
|
|
Waste Management
|
79.0
|
39%
|
23.3
|
41%
|
Arthur Andersen
|
Fined by the SEC for accounting fraud.
|
|
auditing
|
48.0
|
|
13.7
|
|
|
|
|
non-audit and consulting
|
31.0
|
|
9.6
|
|
|
|
|
WorldCom
|
26.7
|
86%
|
16.8
|
74%
|
Arthur Andersen
|
Under investigation by the SEC for accounting fraud.
|
|
auditing
|
3.8
|
|
4.4
|
|
|
|
|
non-audit and consulting
|
22.9
|
|
12.4
|
|
|
|
|
Xerox
|
18.8
|
40%
|
n/a
|
n/a
|
KPMG
|
Paid a $10 million fine to the SEC for accounting fraud.
|
|
auditing
|
11.3
|
|
n/a
|
|
|
|
|
non-audit and consulting
|
7.5
|
|
n/a
|
|
|
|
|
TOTALS, Corporate Scandals
|
$ 448.3
|
67%
|
$ 377.9
|
75%
|
|
|
|
auditing
|
$ 149.1
|
|
$ 94.2
|
|
|
|
|
non-audit and consulting
|
$ 299.1
|
|
$ 283.7
|
|
|
|
