Enron Corp. - University of California | Office of The President

investors that would hold assets and the debt Enron was incurring to finance them. Andersen and
the Enron Defendants knew however, that if Enron retained effective control over the joint entity,
GAAP required consolidation of the investment in its entirety (the inclusion of all assets, liabilities
and losses) into Enron's consolidated financial statements. Determined to earn the enormous fees
associated with this guidance, Andersen abandoned its professional duty to remain independent,
objective and skeptical, and did not require revision of an accounting treatment it had approved, even
when Enron and its lawyers and bankers structured more and more egregious transactions. The effort
put forth by Andersen included the consultation and involvement of partners at the highest level of
Andersen, including top partners at Andersen's national office headquartered in Chicago.
911. In this collaboration with Enron, its lawyers and bankers, Andersen violated the
profession's fundamental principles of objectivity, skepticism, independence and integrity required
by GAAS. As an auditor, Andersen's job was not to find a way to justify spurious accounting
treatment that a layman would intuitively recognize as a ruse.
912. Keeping the Enron client happy at all costs however, was so important to Andersen
partners that they found ways to either ignore or justify their own complicity in the most egregious
examples of Enron's improper accounting as alleged herein. As an example, during an Andersen
meeting in 2/01 held to discuss Enron's serious accounting issues, it is very apparent that top level
Andersen partners from both the Houston and Chicago offices concluded that the potential to almost
double the Enron fee level to an unprecedented $100 million per year was worth retaining the client
despite the fact that Andersen knew Enron's accounting presented serious engagement risks:
Ultimately the conclusion was reached to retain Enron as a client citing that
it appeared that we had the appropriate people and processes in place to serve Enron
and manage our engagement risks. We discussed whether there would be a perceived
independence issue solely considering our level of fees. We discussed that the
concerns should not be on the magnitude of fees but on the nature of fees. We
arbitrarily discussed that it would not be unforeseeable that fees could reach a $100
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