WASHINGTON - Embattled auditor Andersen said it reminded employees going over Enron Corp.'s books in October that it was company policy to destroy preliminary versions or drafts of documents but the firm stopped short of saying no inappropriate actions were taken.

In a statement released late on Monday, Andersen said its in-house lawyer Nancy Temple, sent an e-mail to Andersen partner Michael Odom on Oct. 12, just a few days before Enron released its quarterly results.

Temple urged Odom, who was responsible for the Houston office, to remind the team of the auditor's policy of retaining some materials related to their reviews and destroying others.

"It is important to recognize that the release of these communications are not a representation that there were no inappropriate actions," Andersen said in its statement.

The No. 5 accounting firm's oversight of energy giant Enron, which went from being ranked 7th on the Fortune 500 list of largest companies to the largest bankruptcy filing in U.S. history, is being closely scrutinized.

Andersen stunned industry experts and other observers when it admitted last week that its employees had destroyed some documents related to its review of Enron's books.

The events surrounding the destruction of documents could pose problems for Andersen on both the legal and regulatory fronts, experts say.

The company did not specify what documents, why they were destroyed or when, except that the destruction had occurred in recent months, before the Securities and Exchange Commission subpoenaed the firm in early November.

Andersen's policy outlines 10 points which include instructions that "only final documents will be retained" drafts and preliminary versions of information will be destroyed currently."

The policy also stated that information from electronic files will be deleted in such a way that prevents later retrieval by Andersen or third parties. It also required voice messages must be deleted monthly or sooner.

But the firm's document policy also states that as a general rule, working papers -- typically documents that support an audit -- must be retained for six years and then destroyed.

Client-related files such as correspondence should be retained until they are "not useful," it said.

In addition, only essential information gathered in connection with client engagements that supports its conclusions should be retained, according to the policy.

Yet the practices, which date back to February 2000, says that in cases of threatened litigation, "no related information will be destroyed."

"The firm policy linked to her e-mail prohibits document destruction under some circumstances and authorizes it under other circumstances," Andersen said in a statement accompanying a copy of Oct. 12 e-mail and internal policy documents.

A congressional aide to a committee probing Enron and Andersen has said thousands of documents were destroyed.

Other points made in its document policy include properly discarding waste paper and burning, shredding or otherwise safely and completely destroying confidential papers.

On Oct. 16, four days after the e-mail reminding Andersen employees to follow the policy, Enron reported its first quarterly loss in over four years after taking charges of $1 billion on poorly performing businesses.

Enron also revealed that little-known partnerships run by then chief financial officer Andrew Fastow had reduced shareholders' equity by $1.2 billion.

Subsequently, numerous lawsuits have been filed against the company and Andersen. The first shareholder lawsuit against Enron was filed in federal court in Houston on Oct 22.

Andersen also said there were other internal communications but did not elaborate.

"We are continuing our review and we hope to be able to announce progress in that regard shortly," it said. Nampa-Reuters