Paper 2 and haiku (blog 8)

Conflicting Interests: Major Problems


Arthur Andersen

With a conflict of interest

Needs to be set straight

 

Arthur Andersen was a major accounting firm that had clients worldwide.  One of their biggest clients was Enron.  Turns out this would also be the client who would ultimately lead to the end of Arthur Andersen’s firm.  I read an article about Arthur Andersen going out of business and how large a part that Enron had in this.  Prior to 2002, Arthur Andersen was known as one of the “Top-Five” accounting firms.  These firms included PwC, Deloitte, Ernst & Young, KPMG, and Arthur Andersen.  But, in 2002, it dropped from these ranks in only 9 months.  Of the 28,000 employees that were formerly at Arthur Andersen fewer than 3000 remain and no public-company audits remain.

This was due to the conflict of interests that Arthur Andersen went through as the independent auditor for Enron.  As read in the Enron case study the auditors had offices in the Enron building and were basically considered employees of Enron.  This is a major conflict of interest for a CPA.  Their job is to be objective and be completely unbiased when auditing a company.  With the conflict of interest occurring, this was an impossible task.  In addition to this, Arthur Andersen then went on to destroy documents related to Enron when the investigation began.  This clearly shows how badly the conflict of interest really was.

I will take a deotological approach into what Arthur Andersen should have done and what decisions should have been made.  I will explore how they could have given an unbiased audit and in turn kept their public auditing practice.  This will also lead an overall issue of independent auditing which I can use for the white paper.

Advertisements

One thought on “Conflicting Interests: Major Problems

  1. The conflict of interest is a great topic to focus on. Given that accounting is so oriented around professional ethics, seems like a natural for virtue ethics.

What do YOU think? Tell us!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s