1. What did Arthur Anderson contribute to the Enron disaster? Arthur Andersen (AA) contributed to the Enron disaster when AA consulting became its own separate entity‚ named Accenture. Revenues from consulting services surpassed revenue from auditing services. A natural competitiveness grew between the two rivals and this is where the problems began to start. Management held maximinizing revenues as their primary focus of success and promotions/bonuses were based on this factor. The CEO of AA‚ Joe
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Arthur Andersen The name Arthur Andersen is a very well known name among households in the world today. At one time‚ the reputation of Arthur Andersen was very positive. 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
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led to non-existent company profits; ultimately misleading investors to become shareholders of what they thought were “good companies”. Arthur Andersen LLP was one of the “Big Five” accounting firms before having to surrender its licenses to practice as Certified Public Accountants in 2002; due to an accumulation of criminal charges (CNN Money). Arthur Andersen was in charge for the accounting records of several companies including Enron‚ WorldCom‚ and Waste Management. By early 2002‚ they had been
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Overview In order “to offer high-quality accounting services”‚ Arthur Andersen (AA)‚ a Northwestern accounting professor started a business to offer services to clients promoting “integrity and sound audit opinions over higher short-run profits”. The company’s “four cornerstones” was good service‚ quality audits‚ well-managed staff‚ and profits for the firm. Their strategy was to focus on quality and high standards of audits rather than profits‚ a very successful strategy that led to consistent
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1. For nearly 90 years‚ Andersen had a culture of doing the right thing. Moral courage defined the organization. However‚ there was a gradual erosion of the culture. Name three cultural changes that contributed to Andersen’s problems and defend your position. The first cultural change was that Andersen embarked on a path that valued consulting service which charged hefty fees ahead of auditing in 1990s. Compared to its original major service‚ auditing that required accountants to insist independence
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Unethical Practices of Arthur Andersen - Week 2 - CheckPoint: 1. What did Arthur Andersen contribute to the Enron Disaster? Arthur Andersen contributed a lot to the Enron Disaster. Arthur Andersen approved the structure of man Special Purpose Entities (SPE) that were used to generate false profits‚ hide losses‚ and to keep financing off Enron’s consolidated financial statements. Also‚ AA failed to abide by the Generally Accepted Accounting Principle (GAAP). In addition‚ AA did not
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ARTHUR ANDERSEN LLP CASE STUDY DUE: Sunday‚ May 12‚ 11:59pm 1. Discuss the environment‚ strategic‚ and organizational changes that occurred over the life of Andersen in the context of figure 11.1. 2. Evaluate Andersen’s claim that their problems on the Enron audit were due to a few “bad partners” in the organization. If you disagree with this claim‚ discuss what you think were the root causes of the problem. 3. Suppose you were Andersen’s managing partner in the early 1990s. Would
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Business Ethics Decision-Making Cases Write-ups Arthur Andersen: Questionable Accounting Practices Name: Wen Jiangshan Student ID:2011008274 Part I. Summary of the case Case 2 mainly introduces how Arthur Andersen‚ who used to be one of the “Big Five” largest accounting firms in the United States‚ strayed away from accepted policies and stuck in a string of accounting scandals‚ finally closed its doors after 90 years of business. The firm’s name was synonymous with
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1. For many years‚ strategy and environment of Arthur Andersen changed especially with regards to the materials. The management of Andersen’s businesses reacted to the changing environment by making the related changes to the organizational architectures such as performance evaluation‚ decision right and reward systems. In the book‚ it is revealed that poorly designed organizations architecture in response to the changing environment in term of material can result into company’s underperformance
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Miller displeased because of how valuable this proposal is to our Natural Cereals division. Sally’s proposal included a limited health message to the high fiber content in our bran cereals. She indicated in a very cautious way that food high in fiber has been associated with studies to lower rates of some forms of cancer; however‚ she did not go about saying that our bran cereals had more bran than other competing bran cereals. She also went about featuring our new “Re-sealable Pack‚” which allows
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