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Arthur Andersen Research Paper

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Arthur Andersen From honesty to fraud During 2002, the reputation of honesty and integrity at Arthur Andersen LLP, was plummeted to the bottom. The public trust in the company's ability to perform audits with the publics interest at heart had completely vanished. The firm that for centuries had been a leader in setting audit standards was now being charged for obstructing of justice and their right to perform audits of SEC-registered companies was revoked when it became known how involved they had been in the Enron scandal, insert text with what they did (or did they give it up themselves? FOOTNOTE?). The scandal was not the first Andersen LLP were involved it. During the 90's several lead auditors had been questioned about their decisions …show more content…

Several authors place the beginning already during Andersen's time at the company. He started to advice companies how to handle accounting issues from the start already. But somewhere during the way the company lost their focus on the most important issue, to “insert quote on how to handle the conflict between auditing and consulting, andersen”. During the 70's the consulting side of Andersen grew bigger leading to tension between the divisions since the auditors were in charge at the firm but no longer made the most money. More and more voices were raised that it would be better to turn the companies into two. The audit partners did not approve of the idea since it mean less in revenue and therefore also less in bonuses for them(insert footnote). I argue that it is here the faith of Arthur Andersen lies. Just as so many other company's people were looking more and more for profit. Earning money was the goal, and seemed to be the only goal no matter what (rewrite …show more content…

It is difficult to say if this was one of the reasons for the several misconducted audits previous mentioned. But I argue that it probably had an impact. When the group no longer was united and spoke with one voice they lost some of their power while the clients gained in power the more consulting fees they paid. Instead of changing their books as xxxxx suggested to Enron, they requested to get him removed from anything that had to do with their company. The audit partner complied. SEC was concerned by the amount of consulting fees all the big accounting firms depended on. During the 90's several discussions were held regarding the issue and how it affected audits. With Enron in hindsight it is difficult to argue that the consulting business didn't affect Arthur Andersen's audit work. In 1998 a suggestion to make it mandatory for accounting firms to disclose how much of their fees from clients came from SEC. Considering the importance of consulting fees for Andersen's revenues it

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