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Volcker to advise Andersen
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February 3, 2002: 4:36 p.m. ET
Ex-Fed chief named to oversight board as accountant amends audit practices.
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NEW YORK (CNNmoney) - Former Federal Reserve Board Chairman Paul A. Volcker was named Sunday by the accounting firm Arthur Andersen LLP to head an independent board that will work with the company to implement changes in audit practices -- a move that appears to be in response to Andersen's role in the collapse of energy trader Enron Corp.
Arthur Andersen also announced some initial reform steps, saying it will no longer accept assignments from publicly traded U.S. audit clients for the design and implementation of financial information systems or for internal audit services.
The company has been sharply criticized for failing to provide proper accounting services to Enron, including its participation in the structuring of some of the partnerships that led Dec. 2 to the biggest bankruptcy filing in U.S. history. Andersen's lead auditor for Enron was fired last month for destroying documents related to the matter, and other Andersen officials have been grilled by Congressional committees regarding the company's actions.
Volcker served as chairman of the Fed from 1979, when he was appointed by President Jimmy Carter, until 1987, when current chairman Alan Greenspan was named by President Ronald Reagan.
"Mr. Volcker is one of the most independent and innovative thinkers in American finance," said Joseph F. Berardino, CEO of Anderson Worldwide, the parent of Arthur Andersen.
Berardino said Volcker and his board will be provided with a full professional staff and full access to all information relevant to its review of the company's procedures.
Berardino said the naming of the board and the initial reform steps are the beginning of a re-examination of the firm. "The overriding purpose of these measures - and those that follow - will be to provide assurance to clients and the investing public that the firm will be restructured to achieve one essential objective: quality auditing," he said.
A report commissioned by Enron, released late Saturday, said Andersen "did not fulfill its professional responsibilities" regarding its audits of the company or raise concerns about the related-party transactions that helped lead to its problems. Andersen Global Managing Partner C.E. Andrews criticized the report, calling it an attempt to "insulate the company's leadership and the Board of Directors from criticism by shifting the blame to others." 
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