Fresh agony for Andersen as inquiry looms into SSL audits

An accountancy watchdog will investigate the role of Andersen, the beleaguered accountancy firm, as auditor to SSL.

The Joint Disciplinary Scheme (JDS), which examines allegations of misconduct by accountants that are deemed to be of "public concern" may also investigate the work of Paul Sanders, SSL's former finance director who is a qualified accountant.

Last year SSL, the condoms and rubber gloves manufacturer, called in the Serious Fraud Office after it discovered that its accounts in 1999 and 2000 had overstated profits and turnover.

Andersen was appointed auditor in 1998 to Seton Scholl, which merged with London International Group to form SSL the following year.

Andersen, which is under attack in the US for its role as auditor to the collapsed energy giant Enron, was retained by SSL after the merger.

The accounting firm signed off the 1999 and 2000 accounts at SSL which have had to be restated. The firm failed to spot that sales and profits have been overstated by £25m.

In July last year, at SSL's annual general meeting, Andersen was ditched in favour of KPMG.

It has been suggested that SSL may sue Andersen. A company spokeswoman said SSL would make no decision on any further action while the Serious Fraud Office criminal investigation continued.

A complaint about Andersen's work for SSL was made to the Institute of Chartered Accountants in England and Wales. It was unclear whether this came from SSL.

The ICAEW conducted its own inquiry and decided that it must go to the JDS, a move that was revealed yesterday.

Christopher Dickson, the executive counsel at the JDS, will now examine the issue and make a recommendation on whether to prosecute Andersen before the body's tribunal.

Mr Dickson said the probe would cover Andersen, and its individual partners that were working for SSL, together with any SSL director who was a qualified accountant. Mr Sanders, a member of the ICAEW, left SSL at the end of 2000. Those found guilty by the JDS could be reprimanded, struck off as auditor, or face unlimited fines.