Case Study One
Arthur Andersen LLP:
Corporate Ethics Failure – A Critical Analysis
Arthur Andersen, in 1913 established a corporate entity that for decades provided a benchmark for auditing and consulting in the accounting industry. From the onset Mr. Andersen worked to build a foundation for his company representative of the principles of excellence in the technical and ethical aspects of his new company. His ethical model focused on Utilitarianism, the greatest amount of good for the greatest amount of people. In the late 1940’s after the founder passed away, newly appointed CEO, Senior Partner Leonard Spacek, further exhibited his leadership and commitment to ethical practices by helping to establish the Accounting Principles Board, their prinmary responsibilities being to set industry accounting and ethical standards. This is a direct reflection on the commitment Arthur Andersons executive staff place on the company’s belief in performing their practice in an honest and trustworthy manner. Spacek was so revered that former Federal Reserve Chairman Paul Volker once refered to as Spacek’s tenure as a time when Arther Andersen was the “Gold Standard “ for the accounting industry. These standards built a reputation in the accounting community which led to tremendous success. Honesty and integrity were trademarks of the company that concentrated on quality, leadership and developing its personnel to be experts in every aspect of the accounting industry . As the business began to grow, Arthur Andersen eventually became a leader in the financial industry, employing as much as 77,000 accounting professionals in 84 countries. A reflection on the many positive aspects of Arthur Andersen, its commitment to the many ethical principles it championed, both in its own corporate structure and that of the accounting community. In this writers opinion, with such metrics in place, it is amazing that such a large...
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