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Who audits whom?
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January 11, 2002: 3:55 p.m. ET
Andersen absent among independent auditors of 10 widely held stocks.
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NEW YORK (CNN/Money) - Accounting firm Andersen may be in the spotlight now after revealing it destroyed documents related to bankrupt energy company Enron, but in the Big Five of accounting it is No. 5.
The company was previously part of Arthur Andersen, which held the top spot of accounting and consulting firms before it was overtaken by the formation of PricewaterhouseCoopers in 1998.
But when Arthur Andersen's consulting unit, now Accenture Ltd. (ACN: down $1.32 to $26.50, Research, Estimates), went its own way, Andersen dropped to the bottom spot of Big Five accounting firms in terms of annual sales and employees.
In a list of 10 of the most widely held stocks and the companies' independent auditors, Andersen is conspicuous by its absence.
AT&T (T: up $0.21 to $19.11, Research, Estimates), Cisco Systems (CSCO: down $0.79 to $20.21, Research, Estimates), ExxonMobil (XOM: down $0.89 to $38.50, Research, Estimates), IBM (IBM: down $1.83 to $120.31, Research, Estimates), and Lucent Technologies (LU: down $0.12 to $7.04, Research, Estimates) all use PricewaterhouseCoopers as their independent auditor.
AOL Time Warner (AOL: down $0.71 to $30.69, Research, Estimates) and Wal-Mart (WMT: down $1.20 to $55.80, Research, Estimates) rely on Ernst & Young, while General Electric (GE: down $0.38 to $38.23, Research, Estimates) and Pfizer (PFE: down $0.41 to $40.60, Research, Estimates) use KPMG and Microsoft (MSFT: down $0.67 to $68.61, Research, Estimates) uses Deloitte and Touche.
Andersen took shots from regulators and lawmakers on Wednesday after it said Enron-related documents and files had been destroyed before they were subpoenaed by the government.
Rep. Billy Tauzin, R-La., whose House Energy and Commerce Committee is among the agencies and panels investigating, called the destruction of documents "a deeply troubling development."
"Anyone who destroyed records simply out of stupidity should be fired. Anyone who destroyed records to try and subvert our investigation should be prosecuted," Tauzin said.
The SEC's enforcement chief, Stephen Cutler, said in a statement read by a spokesman that the destruction of documents was an "extremely serious matter."
"Probably all the goodwill and reputation that Andersen had carefully built up all these years are being sacrificed at the altar of Enron," Bob Willens, accounting analyst at Lehman Brothers, said Wednesday. "They were the gold standard those days. Now whenever you mention Andersen, you think of Enron."
History of gov't scrunity for Big Five
The Big Five have been the subject of intense scrutiny by the Securities and Exchange Commission over concerns of the auditors' independence, and in January 2000 an SEC review concluded many of the partners at accounting firm PricewaterhouseCoopers owned stock in the companies it was auditing.
A month later Ernst & Young decided to sell its consulting unit to Cap Gemini for $11 billion.
In June 2000 all Big Five companies agreed to a self-audit to determine whether they were in violation of rules that prevent senior officials from owning shares of companies they are examining.
Eventually, regulatory pressure led to the rest of the Big Five following Ernst & Young's lead and divorcing their consultancy and accounting businesses.
Andersen Consulting split from Arthur Andersen, eventually going public, while KPMG Consulting (KCIN: down $0.04 to $17.01, Research, Estimates) also went public.
A plan to sell PricewaterhouseCooper's consulting arm to Hewlett-Packard (HWP: down $0.45 to $22.88, Research, Estimates) in November 2000 fell through and the company reverted to its original plan of separating the accounting and consulting businesses. 
-- from staff and wire reports
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