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SEC probing Andersen
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August 25, 2000: 12:40 a.m. ET
Regulators exploring if fees from Waste Management compromised standards
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NEW YORK (CNNfn) - Securities regulators are investigating whether consulting fees paid by Waste Management may have compromised the independence of Arthur Andersen LLP's auditing work for the trash hauler, the Wall Street Journal reported in its online edition Friday.
According to the Journal, the Securities and Exchange Commission is probing whether large consulting fees received by No. 1 accounting firm Arthur Andersen may have breached the auditor's independence to turn up a long string of questionable accounting irregularities in Waste Management's books.
 Waste Management, the world's largest trash hauling company, took a $3.5 billion charge in 1998 related to years of questionable accounting practices, and has since agreed to pay $220 million along with Arthur Andersen to settle shareholder litigation in the matter.
The case is shaping up as a possible centerpiece of a campaign by the SEC to demonstrate that conflicts of interest can be caused by the proliferation of consulting and other non-auditing services that numerous accounting firms routinely offer, people close to the matter told the Journal.
From 1991 to 1997, Arthur Andersen received about $50 million in fees for consulting services at Waste Management sites worldwide, dwarfing the $10 million in audit payments during the same period, according to the knowledgeable people. The SEC, which declined to comment in the Journal's report, is trying to determine if auditors looked the other way to keep consulting fees flowing, the Journal said.
The general existence of a probe into Arthur Andersen's handling of Waste Management's financial statements has been known since April 1998, when the Houston-based trash hauler, fresh from adopting more conservative accounting practices that increased truck-depreciation and other income-statement expenses, revealed the inquiry in an SEC filing.
Shares of Waste Management (WMI: Research, Estimates) ended the trading day Thursday down 3/8 at 19-1/8. 
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