Congress Studies Thousands of Enron-Related Documents
CAROL COSTELLO, CNN ANCHOR: Now more on Enron. A letter from an Enron employee to the company's chairman warned of "funny accounting that could mean trouble." The warning came months before Enron declared bankruptcy. The letter is one of thousands of documents being studied by Congressional investigators. CNN's Allan Chernoff updates us on the probe.</s>ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): The House Energy and Commerce Committee said a memo authorizing disposal of thousands of documents related to Enron audits came from an in-house attorney at Enron's accountant, Andersen. Congressional investigators say documents were destroyed as late as last November, after Enron had restated its financials and the SEC had begun a formal inquiry, documents that should have been held indefinitely, according to accounting experts.</s>ALAN ANDERSON, AMERICAN INSTITUTE OF CPAS: If the records were certainly subject to subpoena and they were destroyed after the subpoena was rendered, that would be more than unusual. That would be illegal.</s>CHERNOFF: One month ago, Andersen's chief executive told Congress the firm would reform itself.</s>JOSEPH BERARDINO, CEO, ARTHUR ANDERSEN: Andersen will have to change to restore the public's interest and confidence. The accounting profession will also have to reform itself. Our system of regulation and discipline has to be improved.</s>CHERNOFF: Yet there is now more heat on the accounting profession. The Securities and Exchange Commission Monday censured accountant KPMG for violating auditor independence rules. At the time, it was a major investor in the Short Term Investments Trust, KPMG was also the auditor of the fund, part of the AIM family of mutual funds.</s>HOWARD SCHILIT, FINANCIAL ANALYST: When auditors are found not to be independent, as in the case of KPMG, or they're found to have missed some major accounting frauds, in the case of Arthur Andersen, we have a profession in crisis.</s>CHERNOFF: The SEC found that KPMG had no procedures in place to prevent conflicts of interest between the firm's investments and its auditing clients. (on camera): And there's more financial fallout from Enron. Northern Trust Corporation is writing off $45 million in loans it made to the company and the New York Stock Exchange is still considering delisting Enron's shares. The average price has been below $1 for more than 30 days. Allan Chernoff, CNN Financial News, New York.