Running head: Management Planning Paper on Arthur Andersen
Management Planning Paper on Arthur Andersen
In 1913, the company Arthur Andersen started by Arthur Andersen and Clarence Delany by the name of Andersen, Delany, & Co. In 1918, it was given the name Arthur Andersen & Co. The company supplied tax, consulting services and auditing for the large business, and itself had a position in the "Big Five" accounting firms. In 2002, this firm was found guilty for auditing an energy corporation, Enron and it surrendered back its rights of auditing. This led to Enron's bankruptcy and loss of 85,000 jobs.
Any type of business development requires constant planning. The expression planning refers to defining the goals of the business and shaping the potential plans of action. This sort of planning has to be approved by the firm and the stakeholders. The development of Arthur Andersen was also dedicated to structuring the character of the firm and there was an equal distribution of profits between the firm's partners. In the long run, the disputes regarding profit sharing between its consultants and partners, led the division of firm into Arthur Andersen and Andersen Consulting.
Enron was the main client of Arthur Andersen for accounting, consulting and auditing but due to some problems in auditing, Arthur Andersen involved into a legal issue due to the case of Enron Corporation in 2001. It shared all the documents related with Enron's auditing and the lawyers of Enron sued the firm for violating its legal responsibility. This resulted into the loss of firm's reputation and the firm collapsed. The firm was violated in the case of Enron Corporation because of the initial retention policy of auditing papers.
In this manner, the company failed to follow its planning function of management. The planning for distributing equal shares of profit failed when the company gained more profit. The planning that was done to keep the records of the audited firm was...
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