Acc 260 Arthur Anderson

Topics: Internal control, Audit, Auditing Pages: 1 (310 words) Published: April 17, 2011
1.Arthur Andersen contributed to the Enron disaster by shredding documents, which was obstruction of justice, by allowing the person in charge of the Enron account to overrule the quality control partner, by being revenue focused and by not standing up to its clients, and by not changing their internal control policies. 3. The prime motivation behind the decisions of Arthur Andersen’s audit partners on the Enron audits was not for the public interest but for profit and fear of losing clients. On page 109, an example that shows the need for profit instead of compliance with GAAP is, “This meant that at AA, the most sensitive decisions were taken by the person who was most concerned with the potential loss of revenue from the client in question, and who was most likely to be subject to the influence of the client.” Another example from the text is also on page 109, and states,” History might have been different if a quality-focused internal control procedure had been in place at AA, rather than one that was revenue focused.” These are just a few examples that show that this audit company was revenue focused and allowed internal control flaws to happen, instead of standing up and fixing these issues for fear of losing clients or money. 4. An auditor should make decisions in the public interest rather than in the interest of management or current shareholders because there are rules in place for an auditor to follow and to not falsify important financial statements. If an auditor were to act in the interest of management or shareholders, then you run into the risk of lying or making false information so they could make money, and that in turn can ruin the company and only out for profit, and in turn can lead to a situation from this article.
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