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Accounting Fears Sink Cardinal Shares

Stocks: The company blames a misunderstanding about its former auditor Andersen for the plunge.

July 03, 2002|From Bloomberg News

Wall Street's high anxiety over corporate accounting scandals led to wild selling of drug wholesaler Cardinal Health Inc.'s shares Tuesday, sending them down as much as 18% in an apparent misunderstanding about certification of the firm's results since 1999.

Dublin, Ohio-based Cardinal said it couldn't get former auditor Arthur Andersen to sign off on the company's financial statements from 1999 through 2001. But Cardinal said the delay is due to staffing problems at Andersen, not problems with Cardinal's numbers.

Andersen, Enron Corp.'s former auditor, was convicted in June of obstructing a U.S. investigation of Enron's collapse and will stop auditing public companies by the end of August.

"After reasonable efforts, we have been unable to obtain Andersen's consent" regarding already audited financial statements, Cardinal said in a regulatory filing.

The wording in the filing triggered a plunge in the firm's shares early in the day, to as low as $46.80. The stock recovered most of the loss after the company clarified the problem. The shares finished down $2.89 to $54.41 on the New York Stock Exchange.

"The Securities and Exchange Commission has provided boilerplate language for former Arthur Andersen clients to use, so we incorporated that language verbatim" in the filing, said Anthony Rucci, chief administrative officer at Cardinal. "This is not about us; we've been given clear audits on all these previous years."

Cardinal has hired Ernst & Young to replace Andersen.

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