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Rthur Anderson Scandal - Essay Example

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Rthur Anderson Scandal

This helped the firm to grow and ended up being one of the companies serving the greatest number of clients in the U.S. Those who worked with Andersen were aware of his motto: "Think straight, talk straight.” Andersen also played a big role in upping the standards in the U.S. accounting industry. Additionally, he was involved in innovation of new accounting standards that are still being used today. Andersen was active in social activities that also got involved in charitable organization as well in promotion of education. The firm spent large amounts of money into training new recruits (Martin and Arthur 127). This was crucial in stressing the company’s morals and its consistency around in offering and performing services. The company was admired by many people for the high morals exhibited. He became even more popular when he refused to engage in a fraud case when one of his prominent clients presented flawed accounting records. He chose to lose the client rather than committing fraud, as was the wish of the client. This had a positive impact since it increased his reputation and that of the company. Greed Begins During the 1980s, the company started experiencing internal friction. Then, there were two divisions making up the firm. These were the consulting division and the audit division. The latter was much more established although consulting was then growing much faster than any other portion of the company (Ferrell et al. 327). This unequal growth of the departments led to the conflict arising since the consulting division felt that they needed a bigger share of the firm’s profits. As a result, there were disputes between both divisions, with each side citing the other as being greedy and unfair. Both the audit and the consulting divisions were essentially separate companies. The consulting firm was under the ownership of Andersen. It paid a percentage of their earnings to the parent company (Ferrell et al. 329). Later, Andersen established another consulting division within his company. This new division competed with the other consulting department and this enabled them to retain all the earnings. Later the two sides split, forming separate companies. Fraud begins Andersen was involved in many cases, all of which he was accused of committing accounting fraud. Some of these companies included Sunbeam, Baptist Founding of Arizona, Quest Communication, Waste Management and Global Crossing. Surprisingly, Andersen was able to settle all these claims without admitting any existence of fraud. In case the claims got more serious and had nothing but to admit to fraud, the company put the blame on a few “corrupt partners.” However, the increased fraud cases were not favorable to the company as they were tarnishing the name of Andersen. Analysis It is clear that the continued unpunished behavior of the company’s activities led to a snowball effect that resulted in increased corruption at a high level. The accounting fraud issues had started small in the past. The activities went on unchecked until the management pushed the limits of the fraudulent deeds (Ferrell et al. 317). For a long time Andersen was generally viewed by many people as the symbol for integrity and honesty. Thus, most of these people thought that these fraudulent activities were not occurring at the high level of the firm. The Enron Scandal Enron Corporation was a global energy, commodities ...Show more


Name: Company Analysis: Course Number: Date: Arthur Anderson Scandal Founding of Andersen LLP Arthur Anderson and Clarence Delany founded Andersen LLP. It was initially known as Andersen, Delany and Co. This was an accounting and auditing firm, which experienced tremendous growth to become one of the biggest accounting firms in the U.S (Martin and Arthur 112)…
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Rthur Anderson Scandal essay example
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