On a related matter, Mayer (2002) reports that well before Enron’s problems became public, an internal e-mail revealed that 14 Andersen partners knew of financial   schemes

being employed by Enron。 However, audit risk concerns seemed to have been outweighed by potential future rewards as the e-mail notes that fees from Enron could possibly  reach

$100 million。 Moreover, Andersen managing partner Berardino commonly emphasized growth over audit quality, and was reluctant to walk away from big clients (Byrne, 2002)。 The magnitude of consulting fees almost certainly impaired Andersen’s independence。

2。5。Auditors’ liability and responsibility

The debate over the auditors’ responsibility to detect and report fraud has many political, legal and economic implications。 The rise in audit failures has led the profession to try to distance itself from responsibility through arguments of contributory negligence and limited liability。 As Willingham (1975, p。 19) stresses, “perhaps the discussion of the auditor’s responsibility for the detection of fraud has not yet diminished because it was the stated audit objective for over 400 years and was removed as an objective by the profession rather than by a change in the demand of clients of accounting firms 。。。 ”

Based upon audit partners’ responses to certain empirical cases, Martens and McEnroe (1992) contend that US auditors focus on rule-dominated practice and often neglect the substance of business transactions。 They predict that if this profession continues to empha- size following “rules” over professionally evaluating substance-over-form, the profession will lose legitimacy。 They warned that the perception that GAAP provides a legal harbor, especially in fraudulent client actions, is risky because the public demands that auditors go beyond GAAP and GAAS to fulfill its responsibilities with Society statements。

Humphrey et al。’s (1993) review of British auditors’ responsibilities regarding fraud found the profession downplaying its responsibilities connected with fraud while an increasingly dissatisfied public demands better performance。 The last few decades have seen auditors requesting additional remuneration to undertake the work needed to detect major frauds in response to a litigious environment。 They (p。 41) also cite a January 1991 Accountancy editorial predicting changes in the accounting profession over the next 10 years that states, “There will be a gigantic fraud。 The auditors will fail to detect it。 The profession will be heavily criticized。 The auditing guideline on fraud will be reviewed 。。。 there will be nothing new under the sun。”

Merino and Kenny (1994) contend that while auditors involved in the 1980s S&L failures may have followed GAAP rules, they ignored the public’s expectation to assess the real economic consequences of their audited transactions。 Auditors have long claimed that their ability to exercise judgment appropriate in dynamic economic conditions “makes” them pro- fessionals。 Public accountants should analyze the economic consequences of transactions。 The existence or non-existence of a specific rule is not the critical issue in the evaluation process。 Auditors should use their experience and expertise to decide what appropriate actions to take—as in both the S&L crisis and Enron’s use of SPEs。

Green (1999) contends that attorneys give scant attention to the auditing profession’s improving audit quality or reporting to avoid potential lawsuits, rarely disclosing the de- tails of actual cases and the root causes of business audit failures。 This lack of information impairs alternative approaches to the liability problem。 Instead, auditors have chosen po- litical responses and seek to shift their risks to society in general, making them defer “real” changes to the audit contract。 Auditors are too often not prepared to consider other