Phoenix (March 4, 2002) - Big Five firm Andersen, which is frantically attempting to hammer out a settlement in the Enron debacle, has agreed to pay $217 million to settle shareholder suits stemming from its audits of the Baptist Foundation of Arizona.
Andersen had served as auditor to the nonprofit concern, which filed for bankruptcy in November 1999, a result of both current and former foundation executives perpetuating a Ponzi scheme that masked losses through a series of shell companies. The result was some $600 million in investor losses.
The Arizona attorney general's office maintained that Andersen auditors knew of the fraud and continued to approve the company's financials. Andersen also will pay Arizona's State Board of Accountancy some $640,000 for costs associated with the investigation.
Andersen partner Jay Ozer and audit engagement partner Ann McGrath, each of whom had responsibility over Andersen's audits of the Baptist Foundation, will give up their CPA licenses. Five foundation officials are currently awaiting trial, while three have already pled guilty.
A three-member board will also review all Andersen's Arizona audits for the next three years.
In other Andersen news, the client exodus continues for the embattled firm as Merck & Co. became the lastest to sever its ties saying it would no longer use the firm as its auditor.
--Electronic Accountant Newswire staff
