Unethical Practices of Arthur Andersen - Week 2 - CheckPoint: 1. What did Arthur Andersen contribute to the Enron Disaster? Arthur Andersen contributed a lot to the Enron Disaster. Arthur Andersen approved the structure of man Special Purpose Entities (SPE) that were used to generate false profits‚ hide losses‚ and to keep financing off Enron’s consolidated financial statements. Also‚ AA failed to abide by the Generally Accepted Accounting Principle (GAAP). In addition‚ AA did not
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When Enron filed for bankruptcy protection on December 2‚ 2001‚ the financial world was shocked. How could this high profile leader in the world of energy trading have failed? Based in Houston‚ Texas‚ Enron was the seventh largest company by revenues in the United States‚ employing 25‚000 people worldwide. Its performance had been lauded in the media‚ and business school cases had held it up as a glowing example of the transformation of a conservative energy company into a global player. It had frequently
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is the case with the Enron Corporation‚ a once massive energy company that suffered arguably the most horrific financial collapse in American history. The Enron failure began with the development of a flawed corporate (organizational) culture‚ and was fulfilled by the constant reinforcement of that culture. From the top down‚ Enron ’s corporate culture damned the company ’s successes and ensured it for eventual collapse. It must by noted that while the collapse of the Enron Corporation was dynamic
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Enron’s Questionable Transactions 1. The special purpose entities (SPEs) got Enron into trouble. 2. It is debatable whether Enron’s directors knew how profits were being made through the SPEs. Speculation is that they did have knowledge‚ but did not question the questionable procedures. Evidence that indicates the directors knew how profits were being made includes the following: • Andrew Fastow’s role in establishing the SPEs and falsely creating 3% independent investors in
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Beneficiaries Social Responsibility to Employees ……………………………………………… 7 Social Irresponsibility to Employees: Wal-mart …………………………………... 8 Social Responsibility to Shareholders …………………………………………….. 11 Social Irresponsibility to Shareholders: Enron ……………………………………. 13 Social Responsibility to the Supply Chain ………………………………………… 14 Social Irresponsibility to the Supply Chain: Monsanto …………………………… 15 Social Responsibility to Customers ……………………………………………….. 17 Social Irresponsibility to
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thousands of employees‚ now lost its reputation as an audit and accounting firm. There are many different thoughts and judgments about the case when Arthur Anderson failed its tasks to detect fraudulent financial activities on Enron and several different companies. The Enron Company filed bankruptcy in December of 2001.Being well known as a big energy company which headquarters is located in Houston‚ the bankruptcy of the company drew lots off attentions from business world. Questions were asked and
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Satisfaction Guarantee DESCRIPTION FOR THIS STUDY GUIDE: Resource: Case 4.1: Enron Corporation and Andersen‚ LLP: Analyzing the Fall of Two Giants in Auditing Cases Complete the questions at the end of the case. Prepare a 150- to 350-word response to the following questions: • What are the principles of the AICPA Code of Professional Conduct? • What part(s) of the AICPA Code of Conduct was violated by Andersen? By any Enron employee who was a CPA? Prepare 12-15 Microsoft® PowerPoint® slides‚ with
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2.1 Accounting Fraud: Mark-to-market technique: This technique of accounting introduced by Skilling (Giroux‚ 2008) revealed Enron successful in escaping losses which were associated with volatile prices of gas and inaccurate predictions. In this way‚ Enron valued long-term trading contracts at market value instead of the traditional historical cost. Mark-to-market is an accounting technique applied where developed markets for financial instruments exist and where there are obvious closing prices
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fund investors lost $70 billion in market value‚ and also the bad loans. Moreover‚ not only did Enron creditors‚ shareholders‚ and bondholders lose out‚ confidence also fell across the market‚ as investors questioned the integrity of the financial statements of other companies in which they held stock. Congressional committees initiated investigations‚ prosecutors brought criminal charges against Enron executives and their accountants for obstruction of justice and securities fraud‚ and institutional
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misconducts‚ such as accounting irregularities and fraud. More seriously‚ it developed a number of lawsuits from1997 to 2005‚ which impelled the SEC to keep a close watch on‚ from its client such as Baptist Foundation of Arizona‚ Sunbeam‚ Waste Management‚ Enron‚ and Worldcom. Especially for the SEC to Enron’s investigating‚ it would be a deadly strike of Andersen. Until 2005‚ the Supreme Court threw out the lawsuit for Andersen. Nevertheless‚ the accounting firm would be difficult to rebuild its original
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