For years the Big Five seemed to look as being sued as a cost of doing business, and they were really getting good at it.

The reason was that as soon as a major publicly held company got into serious financial trouble, the plaintiffs' lawyers usually automatically named the company's auditors as co-defendants. Initially, when these suits started, they would often drag on for years with lengthy discovery proceedings before there was any damage award or settlement.

The Big Five saw these suits, and any costs incurred, as a necessary evil. When they settled or paid an award, the mantra appeared to be "It is cheaper to settle than to continue the litigation." Very little detail would come out on what exactly, if anything, the auditor did wrong. Once the lawsuit was finished, business went back to normal for the auditor.

Now the ante has been upped. A lawsuit arising from the Enron bankruptcy cannot be viewed as a cost of doing business. Rather, it is a lawsuit that will probably determine whether Andersen will continue to be in business.

That is why Andersen is already contacting lawyers for Enron investors, creditors, and employees and tossing around numbers like $700 and $800 million to settle. We even hear the figure of $1 billion dollars being thrown around as to what Andersen will be glad to pay to get the Enron debacle behind them ASAP. In fiscal year ending 2001, Andersen reported $4.3 billion in revenue. Can it really view $1 billion as a cost of doing business?

The Big Five has to change it mindset beginning with better quality control and improvements in their audits. There also should be an established uniformity set for every audit, including the possible inclusion of a published checklist with required auditor questions and answers from a company's officers.

Most importantly, a regulatory environment that ensures compliance with these established uniform criteria and also ensures that failed audits are automatically and closely reviewed with monitoring of subsequent audits. In that type of an environment, maybe we wouldn't have a Deloitte & Touche's peer review that finds little wrong with Andersen's procedures while at about the same time astronomical sums are being offered to settle the Enron lawsuits.

Make no mistake about it. Andersen's future is in jeopardy here, but so too are other members of the Big Five. The rules for auditing are going to change and it will impact all of their revenue. They will be participating in the process, but before they get too deeply involved they should look to their smaller brethren firms--Those thousands of firms that know of the danger of being sued and don't treat it as a regularly expected occurrence. They actually fear it. Maybe that's the key. When you have that concern, you do more to protect against it happening.

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