1.0 SUMMARY OF FACTS OF THE CASE STUDY After understanding the overall of case study‚ Arthur Andersen: Questionable Accounting Practice‚ we have identified a few facts. The following subsection will present the facts. 1.1 ARTHUR ANDERSEN Arthur Andersen LLP was founded in Chicago in 1913 by Arthur Andersen and partner Clerence DeLeny. Over a span or nearly 90 years‚ the Chicago accounting would became known as one of the “Big Five” largest accounting firms in the United States together
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However‚ the risky and unethical decisions that were made over the ending years by top management‚ gave Arthur Andersen a famous name with not such a positive reputation. Arthur Andersen became involved in many scandals with the largest being that of Enron Incorporated. Poor decision making by upper management and issues with ethics caused a rapid decline in the firm’s reputation. “Arthur Andersen himself originally built his business by putting reputation over profit” (Brown‚ K. & Dugan‚ I.‚ 2002
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management team went through the books. Motivation seems to be that this publicly traded company needed to keep stock prices up to keep investors and shareholders happy. Incentive‚ opportunity and rationalization are all at play here. The Enron Scandal in 2001. Enron was inflating its income by $586 million. Thousands of employees and investors lost their retirement accounts. Thousands
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condition to creditors and investors. By borrowing more money‚ it would have showed that the company was in the process of losing assets and that would have sent red flags to stockholders to pull out and not invest any more money with the company. “Enron allowed its chief financial officer‚ Andrew Fastow‚ to set up a fund called LJM and engage in suspect deals that made Enron’s books look better.” This is similar to what David and his friend did‚ started up a sister company to Global to make their
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has corruption. In today’s developing nations‚ corruption has become an overwhelming predicament. There is no country that has not been hit in some form or fashion‚ in spite of its political system‚ development‚ or its social and economic culture. Enron is proof of this. Lately‚ more attention has been focused on world-wide corruption due to the immense increase in scandals. The United States and Europe share the spotlight as well as Africa‚ South America and China. But what really defines corruption
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Ethical Issues in the workforce [pic] Stephanie Wilcox Bus 610 Kathleen Henry June 6‚ 2011 Ethical issues in the workforce In my own opinion ethical issues are a major concern because of the people trying to sell products. They have to build trust and integrity with their employees and consumers about their product. According to Knicki & Kretner‚ “ethics involves the study of moral issues and choices” (Knicki & Kretner‚ 2009‚ pg.23). Knicki
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What was the culture at Lehman Brothers like? How did this culture contribute to the company’s downfall? Culture in a workplace can be determined based upon values‚ beliefs‚ interests‚ and experiences. At the Lehman Brothers they rewarded risk at any cost without validation. One of the main issues was their rapid growth over a 13 year period with very little change to their corporate culture. Questionable deals‚ unnecessary risks‚ and short-term profits were rewarded by management. The culture
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to exercise with their independent and resulted in facing a claim‚ some more severe cases has resulted in curtailment of their activities‚ suspended by companies‚ and even close down due to consequential loss of reputation. Let’s take the famous Enron case as an example. Arthur Andersen‚ which used to be one of five largest auditor firms in the world‚ failed to perform a proper auditing work under the threat of its client‚ which lead to the impairment of independence and caused a serious audit failure
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be grounded in natural law‚ religious tenets‚ parental and family influence‚ educational experiences‚ life experiences‚ and cultural and societal expectations. The days of when people were simply trusted to always do the right thing are over with ENRON and WorldCom and the devastation that followed in the business world you are now guilty until proven innocent. Ethics are now written clearly out in agreements that are signed when people are newly hired and the employee is expected to follow those
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Modern accounting systems have become the foundation from which the modern organization can rely and depend upon to maintain a strong efficient strategy that will help the organization grow. The modern accounting systems embraces the old accounting practices that have been used for hundreds of years and builds upon that platform to give modern organizations control over the finances. There must be set in place internal controls to keep the company assets from being stolen and that is why modern
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