SENIOR FINANCIAL EXECUTIVES SAY ENRON DAMAGED CREDIBILITY
OF ACCOUNTING FIRMS
NEW YORK, Feb. 12 -- Only 39% of senior financial executives at America's 1,000 largest companies are "very confident" in the reliability of the auditing being done for corporations today, according to a new national survey by Schulman, Ronca & Bucuvalas, Inc. (SRBI), a financial strategy consulting firm based here.

The SRBI study interviewed by telephone a random sample of 100 senior financial executives at Fortune 1000 companies from Feb. 5-8 in the aftermath of the Enron debacle.

These senior executives are divided over the extent to which the problems with the auditing done in the Enron bankruptcy are more widespread, with almost four in 10 (39%) believing that auditing problems go beyond just Enron.

The survey "The Financial Officers View: The Enron/Anderson Fall-Out" also found that the Enron bankruptcy has badly damaged the credibility of the accounting industry in general and Arthur Andersen in particular in the eyes of these senior executives. Moreover, they are divided over possible solutions.

Other survey findings include:
> Senior executives are divided over whether the auditing problems associated with the Enron bankruptcy are "limited to Enron." Only half (51%) say the auditing problems are limited to Enron, while four in 10 (39%) say the problems are "more widespread."

> Only four in 10 executives (39%) are "very confident" in the reliability of auditing, while 60% are just "somewhat confident."

> Fully 82% of these senior executives believe that the Enron bankruptcy is a "significant problem" for the "credibility of auditing and accounting firms," and another 17% say it is "somewhat of a problem."

> Almost four in 10 senior executives (39%) say that they are now reviewing their own relationship with their accounting firm as result of the Enron controversy. One reason may be that accounting firms also currently provide consulting services to three in five (61%) of these companies.

Questions about Andersen's Survival
The Enron bankruptcy has had a strongly negative impact on the image of Arthur Andersen. Half of senior financial executives (50%) say that their companies would not consider using Arthur Andersen in the future.

Only 39% believe the accounting firm will survive in its present form. Almost four in 10 (37%) believe that Arthur Andersen will either be taken over (15%) or will merge with another accounting firm as an outgrowth of Enron (22%). The remaining 23% are unsure about Andersen's fate.

How to Avoid Future Problems
One proposal to reduce conflicts of interest between accounting firms and clients is to put a limit on the number of years that a firm may audit a corporation. This proposal to limit auditing terms was rejected by the vast majority (72%) of executives. Only one in five (26%) say that there should be a limit.

Executives are divided over whether the special purpose entities or partnerships created by Enron to keep debt off the company's books should be made illegal. Over one-half (51%) say these special purpose entities should not be made illegal, 36% say they should be made illegal and the remaining 13% were unsure whether to make these special purpose entities illegal or not.

A large majority of these financial executives (59%) would prohibit accounting firms from providing auditing services to their accounting clients. Only 35% feel accounting firms should be able to provide both of these services.

Most executives (60%) reject the need for new government regulations over accounting firms. Instead, most (85%) feel that the government needs to better enforce existing regulations. However, a minority (37%) did feel there was a need to create new government regulations.

Methodology
This random sample survey of 100 senior financial officers in America's 1000 largest companies was conducted by Schulman, Ronca & Bucuvalas, Inc. (SRBI), a financial strategy consultancy based in New York City. Interviewing, by telephone, was conducted February 5-February 8, 2002. The sampling error is approximately +/- 8.8 percentage points at the 95% confidence level. A complete set of interview questions can be found at www.srbi.com.

About SRBI
Schulman, Ronca & Bucuvalas, Inc. (www.srbi.com) is a full-service international market strategy and opinion research firm. Founded in 1981, SRBI specializes in banking and finance, public policy, media, telecommunications, transportation, utilities and health care research. The firm's clients include many of the nation's largest financial institutions.

Headquartered in New York City, SRBI has additional offices in the Washington, D.C. area, Fort Myers, FL, West Long Branch, NJ and Chattanooga, TN. SRBI is an affiliate of Global Market Research, a worldwide association of market research companies.

SRBI's services include market strategy, branding, brand equity, customer loyalty, positioning, new product development, advertising effectiveness, distribution channel customer migration and internet-based research services.

Q1.  Do you believe the problems with the auditing done in the Enron
bankruptcy are limited to Enron and a few other firms, OR are they more
widespread?
                                                       100
                                           Tot/Ans    %/Ans

  1.  Problems are limited to Enron          51       51.0
  2.  Problems are more widespread           39       39.0
  3.  (VOL)DK/Not Sure                        9        9.0
  4.  (VOL)Refused                            1        1.0





 (RESPONSES OF THOSE WHO SAY PROBLEMS ARE MORE WIDESPREAD)
Q1a.  Are they... (READ EACH ITEM)?

                                             39
                                   Tot/Ans  %/Ans

  1.  Much more widespread           6      15.4
  2.  Somewhat widespread           26      66.7
  3.  Not too widespread             6      15.4
  4.  (VOL)DK/Not Sure               1       2.6
  5.  (VOL)Refused                   0       0.0




Q2.  How great a problem is the Enron bankruptcy for the overall credibility
of the auditing and accounting firms?  Is it...(READ LIST)

                                                    100
                                         Tot/Ans   %/Ans

  1.  A significant problem               82       82.0
  2.  Somewhat of a problem               17       17.0
  3.  Not too much of a problem            0        0.0
  4.  Not a problem at all                 0        0.0
  5.  (VOL)DK/Not Sure                     1        1.0
  6.  (VOL)Refused                         0        0.0





Q3.  Overall, how confident are you in the reliability of the auditing being
done for corporations in general?  Are you...(READ LIST)

                                             100
                                  Tot/Ans   %/Ans

  1.  Very confident                39      39.0
  2.  Somewhat confident            60      60.0
  3.  Not too confident              0       0.0
  4.  Not at all confident           0       0.0
  5.  (VOL)DK/Not Sure               1       1.0
  6.  (VOL)Refused                   0       0.0





Q4.  Is your company reviewing its own relationship with your accounting
firm as result of the controversies surrounding the Enron bankruptcy?

                                         100
                              Tot/Ans   %/Ans

  1.  Yes                       39      39.0
  2.  No                        54      54.0
  3.  (VOL)DK/Not Sure           4       4.0
  4.  (VOL)Refused               3       3.0




Q5.  Does the accounting firm responsible for auditing your company's
books also provide consulting services to your company?

                                          100
                              Tot/Ans    %/Ans

  1.  Yes                       61       61.0
  2.  No                        34       34.0
  3.  (VOL)DK/Not Sure           1        1.0
  4.  (VOL)Refused               4        4.0





Q6.  Do you think the special purpose entities or partnerships created
by Enron to keep debt off the company's books should be made illegal?

                                          100
                              Tot/Ans    %/Ans

  1.  Yes, made illegal         36       36.0
  2.  No, not made illegal      51       51.0
  3.  (VOL)DK/Not sure          13       13.0
  4.  (VOL)Refused               0        0.0




Q7.  Should there be a limit to the number of years, say seven years, that
an accounting firm may provide auditing services to a client in order to
provide the accounting firm with a little more independence from their client?

                                          100
                              Tot/Ans    %/Ans

  1.  Yes, should be a limit    26       26.0
  2.  No, no limit              72       72.0
  3.  (VOL)DK/Not Sure           1        1.0
  4.  (VOL)Refused               1        1.0




Q8.  Should accounting firms be permitted to provide both accounting and
auditing services to the same companies, or should they be permitted to do
only one of them?

                                                            100
                                                Tot/Ans   %/Ans

  1.  Permitted to provide both accounting       35       35.0
      and auditing services to the same company
  2.  Permitted to provide only one of           59       59.0
      these services to a company
  3.  (VOL)DK/Not sure                            5        5.0
  4.  (VOL)Refused                                1        1.0

          
 

9.  Do you believe that new government regulations over accounting
firms are required?

                                                    100
                                       Tot/Ans     %/Ans

  1.  New regulations required           37        37.0
  2.  No, not required                   60        60.0
  3.  (VOL)DK/Not sure                    3         3.0
  4.  (VOL)Refused                        0         0.0




Q10.  Do you believe that the government needs to better enforce
regulations that already exist?

                                                           100
                                         Tot/Ans     %/Ans

  1.  Yes, Needs to better enforce          85        85.0
      existing regulations
  2.  No, Does not need to better           14        14.0
      enforce existing regulations
  3.  (VOL)DK/Not Sure                        0         0.0
  4.  (VOL)Refused                            1         1.0




Q11.  As a result of the Enron bankruptcy, would your company be less
likely to use Arthur Andersen in the future, or would it make no difference?

                                                100
                                    Tot/Ans    %/Ans

  1.  Less Likely                     50       50.0
  2.  Would make no difference        43       43.0
  3.  (VOL)More likely                 0        0.0
  4.  (VOL)DK/Not Sure                 4        4.0
  5.  (VOL)Refused                     3        3.0




Q12.  Looking ahead, do you think that Arthur Andersen will be able to
survive as a company or do you think it will be merged with or taken over
by another firm?

                                             100
                                 Tot/Ans    %/Ans

  1.  It will survive              39       39.0
  2.  Taken over                   15       15.0
  3.  Will be in a merger          22       22.0
  4.  (VOL)DK/Not sure             23       23.0
  5.  (VOL)Refused                  1        1.0





Q13.  Which accounting firm does your company use to audit your books?

                                                        100
                                            Tot/Ans    %/Ans

  1.  Arthur Andersen                         17       17.0
  2.  Deloitte Touche                         19       19.0
  3.  Ernst and Young                         25       25.0
  4.  KPMG                                    11       11.0
  5.  Price Waterhouse Coopers (PWC)          23       23.0
 11.  Other (Specify)^o                        1        1.0
 12.  (VOL)DK/Not Sure                         0        0.0
 13.  (VOL)Refused                             4        4.0
 14.  Other (specify)                          0        0.0