Arthur Anderson Culture and Its Downfall

Topics: Enron scandal, Ethics, Arthur Andersen Pages: 4 (1310 words) Published: October 9, 2006
1.1 Aspects of Andersen's culture that would be signals of a dysfunctional culture. •Inability to question superior's practices and incapability to suggest new ways of doing things in all areas of the firm. •Andersen's organization, culture and practices were derived from the old structure, which were still seen as the best practices even if outdated. At the organization, new trends of the market and new competitors were not going to change any of the company. "Don't question it. That's the way it's always been done". They had no desire to change their archaic practices. •When Anderson realized that they could not survive with the current, traditional business approach and their competitive edge was dwindling, they switched from a "pillar of integrity" company to one that focused solely on keeping clients at any cost. •Andersen was too fee-driven. For example, hard selling of services (particularly consultants tagging along on audits) that the clients did not need and giving results of both auditing and consulting, supported by the client's goals. •Resistance to change from seemingly unethical to ethical practices. The root of the problem was top management figures who exemplified poor ethical practices. •Internal conflicts of interests between consulting and auditing businesses. •Internal competition over who gets credit for fees created backfires inside the organization. 1.2 Andersen culture impacted the responsibilities to its stakeholders over time because: •Andersen's main focus shifted away from serving public to serving themselves •Culture shifted to just getting as much revenue from clients as possible. Not only assisted with the necessary consulting and auditing of each case, but enforced unnecessary ones. •Began to underestimate vulnerabilities in their practices which jeopardizing the organization's future. "Cross fingers and pray" when auditing and consulting proved to be an ineffective method. •The organizational incentives...
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