Arthur Andersen Case - 2098 Words

1. What did Arthur Anderson contribute to the Enron disaster? Arthur Andersen (AA) contributed to the Enron disaster when AA consulting became its own separate entity, named Accenture. Revenues from consulting services surpassed revenue from auditing services. A natural competitiveness grew between the two rivals and this is where the problems began to start. Management held maximinizing revenues as their primary focus of success and promotions/bonuses were based on this factor. The CEO of AA, Joe Berardino, was an extremely aggressive pursuer of revenue. This set a negative culture at the top of the company and partners were expected to comply and atttain that demand. In addition, AA recognized the retention of audit clients as imperative†¦show more content†¦Ethical behaviour in an organization is guided by the ethical culture of the organization, by any relevant professional norms and codes, and particularly by the tone at the top and the example set by top executives. AA’s CEO at the time, Joe Berardino played a significant role in misguiding the firm and pushing revenue generation rather than working towards decreasing the conflicts between the auditing profession and the public interest. On April 2, 2002, U.S. House Energy and Commerce Committee released a memo dated December 9, 1999 from Carl Bass a partner in AA’s Professional Services Group to David Duncan, the AA partner in charge of the Enron account. This memo asked for an accounting change that would have resulted in a $30-$50 million change to Enron’s earnings (believed to be in regard to the SPE transactions). In February 2000, Bass attempted again to bring light on what he believed was an arm’s length transaction by emailing Duncan to object setting up LJM Partnership (LJM was a company set up by former Enron CFO Andrew Fastow). Duncan overruled Bass on the first memo and shortly after the second attempt where he questioned the CFO, Andrew Fastow and his role with the SPE’s was Duncan removed from the Enron acc ount entirely. In any other of the Big 5 firms, Bass would have been able to overrule Duncan. However, this is a great example that stresses that AA’s objectives wereShow MoreRelatedArthur Andersen And Enron Case Essay983 Words   |  4 Pages 1.What was the case about? (Summary of the Case) The case is about Arthur Andersen s role in accounting fraud at Enron which was one of its major clients. The criminal charges faced by the firm in the Enron case and how the Enron case eventually led to the closure of Arthur Andersen company. The company was convicted in 2002 of one count of obstruction of justice because of its role in Enron’s auditing. After the conviction, the firm could no longer provide public accounting services. On JuneRead MoreArthur Andersen Case2216 Words   |  9 PagesOverview In order â€Å"to offer high-quality accounting services†, Arthur Andersen (AA), a Northwestern accounting professor started a business to offer services to clients promoting â€Å"integrity and sound audit opinions over higher short-run profits†. The company’s â€Å"four cornerstones† was good service, quality audits, well-managed staff, and profits for the firm. Their strategy was to focus on quality and high standards of audits rather than profits, a very successful strategy that led to consistentRead MoreArthur Andersen s Enron Case918 Words   |  4 Pages The case is about Arthur Andersen s role in accounting fraud at Enron; Enron was one of its Arthur Andersen major clients. The criminal charges faced by Andersen in the Enron case and how the case eventually led to the closure of the company. It was convicted in 2002 of one count of obstruction of justice because of its role in Enron’s auditing. 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