Unethical Practices Of Arthur Anderson Essay
Unethical Practices of Arthur Anderson: Week 2 Checkpoint
ACC/260 – Accounting Ethics: Keeping It Clean
September 26, 2013
Thomas Scholz
What did Arthur Andersen contribute to the Enron disaster?
Assistance! Arthur Andersen assisted Enron in deceiving stakeholders by revealing ways to generate false profits and hide losses through the development of Special Purpose Entities (SPEs). Enron’s consolidated financial statements did not depict or clearly give investors an accurate assessment about the company’s operating and financing activities. Generally Accepted Accounting Principles (GAAP) were not observed nor enforced; Arthur Anderson okayed/ condoned Enron to issue shares “as …show more content…
Cite examples that reveal this motivation.
Revenue! Money was clearly the prime motivation behind the decisions of Arthur Anderson’s audit partners. However unlikely, Arthur Anderson managed to push company boundaries and imploy tactics of a blind eye and a deaf ear within companies such as Enron, WorldCom, etc. With that being said, one should not fall under the impression that AA acted alone or solely arranged for these occurrences i.e. Enron and WorldCom bankruptcies to take place; clients were also at fault!
According to Barbara Ley Toffler, “When Berardino (AA’s CEO) would get up at a partners meeting, all that was ever reported in terms of success was dollars. Quality wasn’t discussed. Content wasn’t discussed. Everything was measured in terms of the buck… Joe was blind to conflict. He was the most aggressive pursuer of revenue that I ever met” (Brooks, L.J. (2007). In addition, one should note that there were warnings of a disaster waiting to happen; why did AA leaders allow Berardino to make such crucial “sensitive” decisions? Were they not aware that Berardino, had every motive to incur revenue no matter the cost? According to the text, Berardino “was most likely to subject to the influence of the client” (Brooks, L.J. (2007). Because AA chose to ignore obvious red flags
ACC/260 – Accounting Ethics: Keeping It Clean
September 26, 2013
Thomas Scholz
What did Arthur Andersen contribute to the Enron disaster?
Assistance! Arthur Andersen assisted Enron in deceiving stakeholders by revealing ways to generate false profits and hide losses through the development of Special Purpose Entities (SPEs). Enron’s consolidated financial statements did not depict or clearly give investors an accurate assessment about the company’s operating and financing activities. Generally Accepted Accounting Principles (GAAP) were not observed nor enforced; Arthur Anderson okayed/ condoned Enron to issue shares “as …show more content…
Cite examples that reveal this motivation.
Revenue! Money was clearly the prime motivation behind the decisions of Arthur Anderson’s audit partners. However unlikely, Arthur Anderson managed to push company boundaries and imploy tactics of a blind eye and a deaf ear within companies such as Enron, WorldCom, etc. With that being said, one should not fall under the impression that AA acted alone or solely arranged for these occurrences i.e. Enron and WorldCom bankruptcies to take place; clients were also at fault!
According to Barbara Ley Toffler, “When Berardino (AA’s CEO) would get up at a partners meeting, all that was ever reported in terms of success was dollars. Quality wasn’t discussed. Content wasn’t discussed. Everything was measured in terms of the buck… Joe was blind to conflict. He was the most aggressive pursuer of revenue that I ever met” (Brooks, L.J. (2007). In addition, one should note that there were warnings of a disaster waiting to happen; why did AA leaders allow Berardino to make such crucial “sensitive” decisions? Were they not aware that Berardino, had every motive to incur revenue no matter the cost? According to the text, Berardino “was most likely to subject to the influence of the client” (Brooks, L.J. (2007). Because AA chose to ignore obvious red flags