Case Analysis # 1
According to the case of Arthur Andersen the legal and ethical issues surrounding the companies auditing of other firms accused of accounting improprieties and the legal issues that surrounded Andersen’s auditing were that there was a conflict of interest and lack of independence on the part of Andersen. As Andersen took up management consulting projects for the clients of whom it was the auditor. If we look at the deaontological ethical perspective which is when one focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on its consequences. Arthur Andersen had the duty to report frauds committed by its clients. Since it failed to do so the act had little moral value from the perspective of virtue ethics assuming that what was moral in a given situation is not only what conventional morality requires but also what the mature person with a good moral character would deem appropriate.
The evidence that Andersen corporate culture contributed to its downfall is supported by the fact that Andersen took up lucrative management consultancy contracts from firms. In addition when firms came under investigation from the federal authorities Arthur Andersen had a culture that contributed to its downfall it actively contributed to obstruction of justice.
The Sarbarnes Oxley Act help minimize the likelihood of auditor failing to identify accounting irregularities are the requirements that the auditor should be independent. Further the requirement that the auditor comment on the internal control firm should be reported and if not sever penalties imposed on those auditors that give false statements. Each of the provisions help minimize the likelihood of auditors failing to identify accounting irregularities. The act lays down the quality of auditing required, the quality of control and independence standard rules. [continues]
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