Aurthor Anderson

As part of a campaign to curb what it sees as growing accounting fraud, the SEC has broadened a number of investigations of companies' earnings reports to include audit work done by outside accountants.

In bringing the first fraud case against any audit firm since 1985, SEC enforcement chief Richard Walker said the action "helps to underscore the importance of auditors as gatekeepers to our capital markets and shows the SEC won't shy away from making auditors comply with their responsibilities."

Under a related administrative proceeding filed Tuesday alleging professional misconduct, the SEC also censured Arthur Andersen, the three audit partners and a fourth partner, Robert Kutsenda, who was the regional audit director at the time of the alleged violations. As part of the censure, the four audit partners are barred from doing accounting work for public companies for a period of one to five years.

"This settlement allows the firm and its partners to close a very difficult chapter and move on," said Terry Hatchett, Arthur Andersen's managing partner-North America. "The SEC has not questioned the underlying quality or effectiveness of our overall audit methodology, nor has the SEC limited our ability to conduct audits for other public companies."

An attorney for Mr. Allgyer declined to comment. Attorneys for Messrs. Maier, Cercavschi and Kutsenda didn't return phone calls.

The Waste Management accounting scandal stands out for it size and breadth. After a board-led probe turned up years of questionable accounting, the company took a $3.5 billion charge in 1998, and since then the trash hauler and Arthur Andersen agreed to pay $220 million to settle shareholder litigation in the matter. The company admitted it had overstated its pretax earnings by $1.43 billion in 1992 to 1996 -- the biggest restatement in SEC history. Neither Waste Management nor any of its employees have been disciplined by the SEC. The SEC said Tuesday that the investigation is...