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Essay / Research Paper Abstract
This 4-page paper discusses how Arthur Andersen went from a company of integrity and honesty in its auditing practices to one that aided Enron in dishonest financial reporting. Bibliography lists 1 source.
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4 pages (~225 words per page)
File: AS43_MTandearth.rtf
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dealings), it wasnt until its client Enron had been found to cook its books to a high degree that this auditing and accounting firm was brought down. It was bad
enough that Arthur Andersen had looked the other way while Enron continued relying on questionable methods when it came to financial reporting. But when the company was found to have
shredded documents pertaining to Enron in the aftermath, investor disgust (not to mention media frenzy) with the company caused it to shed clients and to finally shut down. The Enron/Andersen
scenario also led to changes in the client/auditor/financial reporting relationship, thanks to the Sarbanes-Oxley Act of 2002. But what would cause a
storied company like Arthur Andersen, a company founded in 1914 to provide high-quality accounting and "sound audit opinions," to support questionable financial reporting activities of a client, and then try
to get rid of the evidence? According to Brickley et al (2006), part of the answer can be found in environmental, strategic and organizational changes that occurred during the more
than 70 years of that companys life. During the first few decades of its existence, Arthur Andersen built a reputation for service,
quality audits and staff - the company valued the quality audits more than short-term profits (Brickley et al, 2006). During the early part of the 20th century, the firm was
known for standing on its principles, whether it was refusing to cook the books for a powerful railroad magnate (as founder Arthur Andersen did in the companys early years) or
leading a crusade to encourage the Securities and Exchange Commission to take action against companies that engaged in nefarious accounting practices (as did Andersen successor Leonard Spacek in 1947) (Brickley
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