FIN 571 WK2 TM Reflection 2 revised
A Sad Tale: The Demise of Arthur Anderson
Baron de Carvalho, Dana Rodriguez, John Ortiz, & Robert Helm
FIN/571
May 11, 2015
Professor Hohl
The company that was once a market leader, partly based on their high ethical principles and integrity experienced conflict in the services they sold. As the market changed, which included the emergence of information technology and a boom in mergers and acquisitions Andersen began to see conflict between its auditing and consulting partners.
Anderson and Company sold auditing and consulting services. Problems can arise as the auditing company themselves are required to pay an auditors’ fee which might challenge the auditors suggestions and recommendations in fear of losing the consulting business. The other problem arises when accounting firms provide consulting services to companies’ they audit. To eliminate the conflict of interest and to meet their fiduciary responsibilities, auditors must maintain independence from the firms they audit. If Anderson and Company would have been able to maintain a high standard when it came to conflict of interest when it came to auditors and consulting partners. The whole idea behind maintaining a high level of responsibility when it comes to ethics is doing the right things will go a lot longer distance than cutting corners by doing unethical things.
As the consulting services division began to be the superior service sold at Anderson and Co, employees that originally only sold auditing services were now asked to sell consulting services to other clients which was a role that many auditors found uncomfortable. They found this to be a conflict of interest which brought on more tension because they also had to upsell to their clients. In order to remain unbiased accounting firm they need to be able to give an honest opinion when it comes to the financial statements of their clients they need to be able to maintain a professional relationship without the ability to distort
Baron de Carvalho, Dana Rodriguez, John Ortiz, & Robert Helm
FIN/571
May 11, 2015
Professor Hohl
The company that was once a market leader, partly based on their high ethical principles and integrity experienced conflict in the services they sold. As the market changed, which included the emergence of information technology and a boom in mergers and acquisitions Andersen began to see conflict between its auditing and consulting partners.
Anderson and Company sold auditing and consulting services. Problems can arise as the auditing company themselves are required to pay an auditors’ fee which might challenge the auditors suggestions and recommendations in fear of losing the consulting business. The other problem arises when accounting firms provide consulting services to companies’ they audit. To eliminate the conflict of interest and to meet their fiduciary responsibilities, auditors must maintain independence from the firms they audit. If Anderson and Company would have been able to maintain a high standard when it came to conflict of interest when it came to auditors and consulting partners. The whole idea behind maintaining a high level of responsibility when it comes to ethics is doing the right things will go a lot longer distance than cutting corners by doing unethical things.
As the consulting services division began to be the superior service sold at Anderson and Co, employees that originally only sold auditing services were now asked to sell consulting services to other clients which was a role that many auditors found uncomfortable. They found this to be a conflict of interest which brought on more tension because they also had to upsell to their clients. In order to remain unbiased accounting firm they need to be able to give an honest opinion when it comes to the financial statements of their clients they need to be able to maintain a professional relationship without the ability to distort