Andersen Effect
A reference to auditors performing more careful due diligence when auditing companies, in order to prevent accounting errors. This extra level of accounting scrutiny often leads to companies restating earnings even though they have not necessarily intentionally misrepresented material accounting information. Investopedia Says:
The Andersen effect takes its name from the accounting firm Arthur Andersen LLP, which was indicted in a number of accounting scandals, particularly that of Enron. The Andersen effect usually occurs as a result of a change in accountants. Related Terms:
Audit
Auditor's Report
Cook The Books
Due Diligence - DD
Enron
Generally Accepted Accounting Principles - GAAP
Internal Auditor
Qualified Opinion
Voodoo Accounting |