Arthur Andersen
SimilaritiesThe late 1990s and early 2000s were full of big deceptions in the American Corporate World. It was a period of ethical wrongdoing that affected millions of people, including workers and investors. All of the ethical scandals we researched were related to accounting frauds; mostly falsifying records on the accounting books such as unrecorded debts and higher assets. These actions led to non-existent company profits; ultimately misleading investors to become shareholders of what they thought were “good companies”.
Arthur Andersen LLP was one of the “Big Five” accounting firms before having to surrender its licenses to practice as Certified Public Accountants in 2002; due to an accumulation of criminal charges (CNN Money). Arthur Andersen was in charge for the accounting records of several companies including Enron, WorldCom, and Waste Management. By early 2002, they had been charged of falsely auditing books for all three companies. The business revenue from these clients was more important than the ethical decision, so they managed to provide misleading information for several years.
Waste Management, Enron and WorldCom all wanted to show higher profits to meet Wall Street expectations and therefore overstated cash flows for several periods (Grant, and Christine Nuzum). By inflating cash flows and refraining from recording liabilities such as depreciation, the net losses of each company was being shown as profits to shareholders. Waste Management had an unrecorded net loss of $1.7 billion, Enron $30 billion, and WorldCom $11 billion (Silverstein, Waste Management & Hancock). When it came down to auditing, Arthur Andersen ignored the frauds and just cared to keep the business of each company.
The masterminds leading all of these frauds were the CEO, CFO and Vice Presidents for each company. They managed to set earning targets and instill in his coworkers to use aggressive accounting techniques to meet them (SEC.gov). The executives also
Arthur Andersen LLP was one of the “Big Five” accounting firms before having to surrender its licenses to practice as Certified Public Accountants in 2002; due to an accumulation of criminal charges (CNN Money). Arthur Andersen was in charge for the accounting records of several companies including Enron, WorldCom, and Waste Management. By early 2002, they had been charged of falsely auditing books for all three companies. The business revenue from these clients was more important than the ethical decision, so they managed to provide misleading information for several years.
Waste Management, Enron and WorldCom all wanted to show higher profits to meet Wall Street expectations and therefore overstated cash flows for several periods (Grant, and Christine Nuzum). By inflating cash flows and refraining from recording liabilities such as depreciation, the net losses of each company was being shown as profits to shareholders. Waste Management had an unrecorded net loss of $1.7 billion, Enron $30 billion, and WorldCom $11 billion (Silverstein, Waste Management & Hancock). When it came down to auditing, Arthur Andersen ignored the frauds and just cared to keep the business of each company.
The masterminds leading all of these frauds were the CEO, CFO and Vice Presidents for each company. They managed to set earning targets and instill in his coworkers to use aggressive accounting techniques to meet them (SEC.gov). The executives also