Arthur Anderson

In: Business and Management

Submitted By xl5635
Words 391
Pages 2
1. Discuss the environmental, strategic, and organizational changes that occurred over the life of Andersen in the context of Figure 11.1.

2. Evaluate Anderson’s claim that their problems on the Enron audit were due to a few “bad partners” in the organization. If you disagree with this claim, discuss what you think were the root causes of the problems.

3. Suppose you were Anderson’s managing partner in the early 1990s. Would you have done anything differently than the actual management (assuming you knew only what they did at the time)?

4. Discuss the relation between what happened to Anderson and multi-task principle agent theory.

5. Discuss the relation between the “hard” and “soft” elements of a firm’s corporate culture in the context of this case.

6. Do you think that the problems at Andersen were unique to them or did they exist at the other big accounting firms? Suppose you were the top partner at one of the other major accounting firms at that time of Anderson’s demise. What actions, if any, would you take in response? Explain.

7. In 2000, the SEC proposed new regulations that would limit consulting work by accounting firms. This proposal was not passed by Congress. Do you think that the legislators were trying to act in the public interest when they failed to pass this proposal? Explain.

8. The American Institute of Certified Public Accountants is the primary professional association for certified public accountants. It has developed a Code of Professional Conduct that sets the standards of conduct for CPAs. People can file complaints about ethical conducts of a CPA with the AICPA, which can levy sanctions and other penalties against its members. Do you think that the unethical conduct at Anderson (and possibly other accounting firms) was the fault of the AICPA for not setting and enforcing higher ethical standards among its members?…...

Similar Documents

Auther Anderson

...Arthur Andersen: Questionable Accounting Practices Steven Young Strayer University Business Ethics: Ethical Decision Making and Cases Dr. Mary Tranquillo November 13, 2012 Arthur Andersen: Questionable Accounting Practices p1 Arthur Andersen, one of the largest accounting firms in the United States, “a name that was synonymous with trust, integrity, and ethics” (Ferrell, Fraedrich, & Ferrell, 2011, p. 348), through a loss of its founder Arthur Andersen, and change in its corporate culture resulting in many unethical business transactions that affected multitudes of primary stakeholders had to close its doors in 2002 after 90 years of business. Review the mandated requirements for legal compliance (from chapter 4) and determine which requirements apply to the Arthur Andersen case. Explain your rationale After re-reading Chapter 4 there are five areas that separate the mandated requirements for legal compliance, and I feel the that two apply to the Arthur Andersen case; the protection of consumers, and incentives to encourage organizational compliance programs. In the laws that protect consumers they require businesses to provide accurate information protecting them from financial scams, unfair, fraudulent, or deceptive practices. There are “Gatekeepers” that are in charge of that such as lawyers, financial rating agencies, and financial reporting services that help enforce high ethical standards. ......

Words: 1433 - Pages: 6

Arthur Anderson Case Study

...2. Arthur Andersen Contribute to the Enron Disaster AA was incapable to either spot or ignored Enron’s manipulation which allowed fraud to take place. AA did not provide opinion to Enron’s audit committee. The firm CFO and the assistants were involved in situations that resulted in a significant conflict of interest and AA have no alternatives approach to manage those conflicts. Even though AA had undertook Enron’s audit function responsibility, AA failed to advice on Enron’s internal controls and policies. As a result, Enron internal control and policies were inadequate to protect the interest of the shareholders. AA failures to bring these matters forward had permitted Enron to continuously manipulate the numbers and caused the public and stakeholders to be misled. 3. Arthur Andersen Faulty Decisions The culture of AA was changed from integrity and in technical competence towards revenue focus. This was due to the change in AA’s CEO to Joseph Berardino. Berardino was aggressive in revenue generation that changes AA culture. Hence, AA was concern with potential loss of revenues from clients. The issue in this case was the use of Special Purpose Entities (SPEs) for financial report manipulation that was approved by AA. SPE is a legal entity created for firm to isolate financial risk. The structure of Enron’s SPEs approved by AA were used for off-balance sheet financing, even though it failed to meet the required outsider 3% equity risk (Viktoriaovoian......

Words: 761 - Pages: 4

Arthur Anderson

...1/25/13 The rise and fall of Arthur Andersen Arthur Andersen Arthur Andersen was born in Plano, Illinois in 1885. He graduated the University of Illinois in 1908 with a degree in accounting. At the age of 23, he was the youngest Certified Public Accountant in the state of Illinois. From 1907 to 1911 he served as the Senior Consultant for Price Waterhouse in Chicago. In 1913, Andersen decided to establish his own accounting firm. At the age of 28, he founded the public accounting firm of Andersen, DeLany & Company in Chicago. Licensed as accountants and auditors in many states across the country, the company grew rapidly during the 1920s. The firm opened six offices nationwide, the most important of which were located in New York (1921), Kansas City (1923), and Los Angeles (1926). During World War II Andersen himself reached the pinnacle of his success. After World War II, Andersen began training his associate, Leonard Spacek, for the company's leadership position. Spacek joined the company in 1928 and was named a partner in 1940, becoming one of Andersen's closest and most trusted confidants. Upon Andersen's death in January 1947, Spacek took over the company, remaining committed to the regimented management style of the founder. During Spacek's tenure, the firm grew from a regional operation located in Chicago with satellite offices across the United States into an international organization with one-stop, total service offices located around the......

Words: 963 - Pages: 4

Anderson Case

...Martin Lee Anderson (c. January 15, 1991 – January 6, 2006) was a 14-year-old from Florida who died while incarcerated at a boot camp-style youth detention center, the Bay County Boot Camp,[1] located in Panama City, Florida and operated by the Bay County Sheriff's Office.[2] Anderson collapsed while performing required physical training at the camp. While running track, he stopped and complained of fatigue. The guards coerced him to continue his run, but then he collapsed and died. A 30-minute portion of the surveillance video depicting the coercion was made public.[3] The teenager's death resulted in a broad outcry accusing the camp guards of racially motivated murder, in part in response to an official videotape that showed the guards using physical coercion. The Florida legislature voted to close the state's five juvenile boot camps. Contents[hide] * 1 Public outcry * 2 Circumstances * 3 Investigation * 3.1 Two autopsies * 4 Controversy and criticism * 4.1 Medical examiner criticized * 4.2 Tunnell's resignation * 4.3 Sit-in and “march for justice” * 5 Actions taken against state/investigators * 5.1 Civil-rights complaints * 5.2 Lawsuit * 5.3 Arrests and trial * 6 Changes to juvenile justice system * 7 See also * 8 Notes * 9 References * 10 External links | [edit] Public outcry The death became a cause célèbre and received national attention. The local Medical Examiner, Dr. Charles Siebert, performed an autopsy......

Words: 447 - Pages: 2

Marian Anderson

...Marian Anderson is remembered as one of the best American contraltos of all time. She was the first African American singer to perform at the White House and also the first African American to sing with New York's Metropolitan Opera. Marian Anderson was born in Philadelphia on Feb. 17, 1902. She never had much money, but she was happy. All of them, her mother, dad, and younger sisters Alyce and Ethel just liked to be together. One thing that may have been different from other childhood is that she loved to sing. She sang in the children's choir at Union Baptist Church. When she turned thirteen, she joined the adult choir too. In high school, she sang in the chorus as well and was educated in the public schools.. Local supporters provided funds for study with Agnes Reifsneider and, later, Giuseppe Boghetti. When Anderson was 23, she entered a competition and won first place over 300 other singers, gaining her an engagement with the New York Philharmonic at Lewisohn Stadium. Further sponsorships enabled her to continue her studies in the United States and, after winning the Rosenwald Fellowship, in Europe. Following debuts in Berlin in 1930 and London in 1932, Anderson concertized in Scandinavia, Germany, South America, and the Soviet Union. In Salzburg, Austria, she gave a sensational performance at the Mozarteum with famous conductor Arturo Toscanini in the audience. Upon hearing her sing, Toscanini reportedly told her she had "a voice heard but once in a century." At the......

Words: 1327 - Pages: 6

Unethical Practices of Arthur Andersen

...Unethical Practices of Arthur Andersen 1.) I think that Arthur Andersen contributed a lot to the Enron Disaster. I think that it all started when AA became its own company. Because of this, the two companies became rivals. AA’s main focus was on revenues. The company did not care how things were done as long as it put money in their pockets. Also, from what I understand, the company made the auditors feel that if they were to say anything that would make the company lose a client, then the auditor would lose their job. Auditors are there to make sure that things are being run ethically. The risk of getting in trouble by their employer blurred the line between what is right and what is wrong. Another thing that I feel like was a huge contributing factor in the Enron disaster was the approval of Special Purpose Entities that were used to generate false information. These entries were used to cover the truth of what was going on in the company. This is extremely unethical. It sounds to me like the integrity of the company went downhill after the split. 2.) I feel like most of the decisions that were made by Arthur Anderson were faulty. They were negligent in almost every decision they made. One of the biggest things was the special purpose entries which were used to cover the truth of what was going on in the company. Lying to make a company look better is extremely unethical. An investor might look into the company and want to invest because of great profits and really the......

Words: 449 - Pages: 2

Judy Anderson

...Judy Anderson was assigned as a recruiter for South Illinois Electric Company (SIE), a small supplier of natural gas and electricity for Cairo, Illinois, and the surrounding area. The company had been expanded rapidly, and this growth was expected to continue. In January 2009, SIE purchased the utilities system serving neighboring Mitchell County. This expansion concerned Judy. The company workforce had increased by 30 percent the previous year, and Judy had struggled to recruit enough qualified job applicants. She knew that new expansion would intensify the problem. Judy is particularly concerned about meter readers. The tasks required in meter reading are relatively simple. A person drives to homes served by the company, finds the gas or electric meter, and records its current reading. If the meter has been tampered with, it is reported. Otherwise, no decision-making of any consequence is associated with the job. The reader performs no calculations. The pay was $8 per hour, which was high for unskilled work in the area. Even so, Judy had been having considerable difficulty keeping the 37 meter reader positions filled. Judy was thinking about how to attract more job applicants when she received a call from the human resource director, Sam McCord. “Judy,” Sam said, “I’m unhappy with the job specification calling for only a high school education for meter readers. In planning for the future, we need better-educated people in the company. I’ve decided......

Words: 355 - Pages: 2

The Rise and Fall of Arthur Andersen

...The Rise and Fall of Arthur Andersen LLP In October 2001, Enron was accused of overstating their earnings in the last few years in excess of $1 billion dollars (Doost, 2001). At the same time, Arthur Andersen, one of the most reputable auditing firms, was responsible for auditing Enron’s financial statements. The Security Exchange Commission (SEC) ordered Arthur Andersen to provide all relevant Enron documentation and auditing files. Going against Arthur Andersen’s impeccable reputation of honesty, David B. Duncan, the Arthur Andersen partner in charge of the Enron account, had his staff destroy thousands of pages of documents and records related to this case of fraud (Oppel & Eichenwald, 2002). Ultimately, the Supreme Court of the United States overturned Arthur Andersen’s conviction of "knowingly...corruptly persuading another person to withhold or alter documents in an official proceeding" (Wojdacz, 2009). However, Arthur Andersen had imploded and was not able to recover. Founder and His Principles Arthur Andersen was founded December 11, 1913. Arthur Andersen had a reputation of exemplary honesty. Arthur Andersen himself came from an immigrant Norwegian family. He worked for Price Waterhouse. At 23, Andersen became the youngest certified public accountant (CPA) in the state of Illinois by educating himself at night (Marotta & Selman, 2009). At this time, CPAs were trying to establish accounting as a profession. Marotta and Selman (2009) stated......

Words: 3364 - Pages: 14

The Sad Tale.the Demise of Arthur Anderson

...Staying On Track: How to Stay Engaged as an Adult Learner in an Online Learning Environment Advancements in technology have brought tremendous changes and reforms in the education sector. It is of interest to scholars that anytime-anywhere is a strategy used to entice students to enroll in online courses. Unlike in the recent past where traditional classes were the only way to achieve academic excellence, it is now possible to attend virtual classes.It Provides flexibility in one's schedule. However, even with this advancement in education, it becomes a challenge to students enrolled in this kind of learning to cope and maintain the high degree of academic excellence. There are several reasons that explain this, but the fundamental one is the lack of proper follow-up. You will agree with me with this kind of program there is no one to see what you are doing and how you are doing it. This system lacks monitoring tools of evaluation that are important for students. It is for this reason that that the following guideline has been developed to help in improving performance in an online assessment. Reading the syllabus is a paramount point. The curriculum provides a guide as to the expectations of a particular course. The adult will understand what is required in that particular unit. They can prepare themselves in terms of resources necessary for that group. A Syllabus is a road map, a blueprint of the real academic journey. It is in the syllabus that assignments due dates...

Words: 965 - Pages: 4

Arther Anderson

...• Within a few years AA moved from one of the largest professional service organizations in the world to almost a complete collapse. • The business environment and strategy changed in many ways. Management team responded by making changes in their organizational architecture through decision rights, performance evaluation, and reward systems. • (Poorly designed organizational architectures can result in poor performance and even a company failure) • If Arthur Anderson had gone back to their roots of utilizing sound audit opinions like they did in the event of a demanding railroad company… • AA promoted its four cornerstones of good service, quality audits, well-managed staff, and profits for the firm. • Auditors were rewarded and promoted for making sound audit decisions. Top management assigned significant decision rights to the central office’s Professional Standards Group. This group consisted of internal experts and monitored audits and issued opinions on how specific types of transactions should be handled. • This structure was used to promote consistent and well-reasoned opinions for the firm. • AA launched their computer consulting business. The demands for information technology help rapidly expand the business and the revenues soon surpassed the auditing business in the mid 1980s. • The traditional accounting business was growing slowly due to increased competition and a large number of merges in the 1990s, auditing was quickly becoming a low......

Words: 329 - Pages: 2

The Demise of Arthur Anderson

...Learning Team Reflection - The Demise of Arthur Anderson Team A: Alex Raye, Chai Gallahun, Frank Hagan, and Leonard Hollomon FIN 571 December 14, 2015 Dr. Robert Mayfield Learning Team Reflection - The Demise of Arthur Anderson Business ethics set a standard for businesses to conduct their affairs with internal and external stakeholders. Corporate ethics allows individuals to scrutinize and self-correct the ethical values and morals of a business. The purpose of this paper is to discuss the mistakes detailed in the Ethics case, “The Demise of Arthur Anderson” and identify the potential actions that leadership could have taken to prevent this organizational failure. The firm committed several errors that could have been prevented through adherence to established ethics and practices. A major accounting firm since 1918, it has become a sad ending for a once powerful corporation. During the 1980’s, changes in business required many organizations to branch out and diversify their business capabilities. Arthur Anderson was no exception to this having operated an accounting practice for some time, they branched out to grow their consulting practice. Many times, these services intertwined and created a conflict of interest that affected their decisions when auditing so not to upset the delicate balance while keeping their businesses growing. At times, the choices that were made where unethical and violated guidelines put in place to prevent accounting scandals. These......

Words: 667 - Pages: 3

The Demise of Aurthur Anderson

...integrity experienced conflicts in the services they sell. As the conditions of the market have changed, which included the emergence of information technologies and a boom in mergers and acquisitions, Anderson began to see the conflict between its audit and consultation partners. Anderson and Company has sold the audit and consulting services. Problems can occur to the extent that the society of the audits themselves are required to pay a tax auditors who could challenge the auditors suggestions and recommendations in the fear of losing the consulting company. The other problem arises when the accounting firms provide consulting services to companies' they audit. To eliminate conflicts of interests and respond to their fiduciary responsibilities, the auditors must preserve their independence compared to the companies that they control. If Anderson would have been able to maintain a high standard when it was of conflicts of interest and then it would also reflect to the auditors and consultation partners. The idea behind the maintenance of a high level of responsibility when it comes to ethics is to make the good things and go much further than to cut corners in doing things contrary to the ethics. As the division of services of consultation has begun to be the superior service sold to Anderson and Co, employees of audit services only sold to the origin were now called to sell consultation services to other clients, which was a role that many accounts found uncomfortable.......

Words: 348 - Pages: 2

Arthur Anderson

...Review the mandated requirements for legal compliance (from chapter 4) and determine which requirements apply to the Arthur Anderson case. There are five categories that separate the mandated requirements for legal compliance. Two directly apply to the Arthur Anderson case. Those requirements include (1) protection of consumers, and (2) incentives to encourage organizational compliance programs. When I read the text, the examples which were given were all about making sure that people were not taken advantage of as a result of an entity’s business practices. The mandated requirement, incentives to encourage organizational compliance programs, speaks directly to the Arthur Anderson case. Our text states, “Gatekeepers such as lawyers, financial rating agencies and even financial reporting services must have high ethical standards.” High ethical standards don’t just happen they are enforced. Without compliance programs, loopholes are created for the dishonest. Discuss how the issues with the Arthur Anderson case may have played out differently if the Sarbanes-Oxley Act had been enacted in 1999. The provisions of Sarbanes-Oxley Act help minimize the likelihood of auditor failing to identify accounting irregularities by the following requirements: 1). Improving the internal control. Auditors comment on the internal control of the firm should be reported. 2). Reinforcing supervision for financial irregularities. This act boosts to establish an independent the Public......

Words: 1133 - Pages: 5

Arthur Anderson

...Fall 2011 Arthur Anderson Mary Myrick-Saddler The History of Arthur Andersen Arthur Andersen LLP., was an accounting firm with an extensive history which is over a span of nearly 90 years, would become one of the Big five largest accounting firms in the United States. First of all, Arthur Andersen the person has been recognized as an important innovator of his professional period moreover, the accounting firm seen as the symbol of trust, integrity and ethic. He had little interest in creating just another accounting firm, but he intended from the start to create an enterprise based upon knowledge, information, and education. Andersen’s goals were set beyond standard practices of accounting, and his business approach was strongly related to auditing. During 1913, Northwestern University accounting Professor Arthur Andersen and Clarence DeLany formed Andersen, DeLany & Co. Several years later, in 1918 DeLany left and the company changed its name to Arthur Andersen. During that period the company developed a philosophy that focused on building a solid corporate culture among all Andersen employees. Arthur Andersen died in 1947, during that period his firm almost experienced a closed down. However, Leonard Spacek, a disciple of Andersen, convinced the company's partners to remain together despite financial uncertainty, and became the managing partner. It continued to perform under the name of Arthur Andersen because of its renowned reputation. Arthur Andersen......

Words: 2867 - Pages: 12

The Fall of Arthur Anderson

...act any auditor must perform between pleasing a client and looking out for the public investor. Seeds for Demise Although nobody knew it at the time, the seeds for Arthur Andersen's eventual demise were sown in 1950, when the firm introduced the "Glickiac" to the world. Named after its inventor, an Andersen engineer named Joseph Glickauf, the clunky device created a sensation by demonstrating that computers weren't just for scientists: Companies could use them to automate their bookkeeping. This ushered in an entirely new business. Rather than just audit the books, Andersen would set up the computers clients needed to keep the books. It wasn't long before Andersen boasted by far the largest technology practice of any accounting firm, raking in huge profits. The flood of money introduced a new element of tension into the partnership. Under rules set by the auditors who ran the firm, all of the profits from all the practice areas had to go into one big pot to be divided among partners. But since the average consultant brought in more money than the average auditor, the consulting side complained the arrangement was unfair. The week after New Year's Day in 1989, at a world-wide meeting of the firm in Dallas, the consultants finally made their break. They won an agreement to separate into two units -- Arthur Andersen and Andersen Consulting -- under a Geneva-based parent company known as Andersen Worldwide SC. But most importantly, the accounting side agreed to make the......

Words: 3102 - Pages: 13

9GAG: Best Funny GIFs Pics v6.02.11r7589-35966b5 APK Mod | Economic Contributions of Small Business | moto de 1949