Arthur Andersen's Contribution To The Ethical And Financial Collapse Of Enron

Arthur Andersen (AA) was a key contributor to the ethical and financial collapse of Enron. The accounting firm has not only been accused of looking the other way to fill their own pockets, but it is also very clear that they lacked independence. Culture has been to blame for the involvement of AA in numerous accounting scandals. When AA began it was not only an accounting audit firm, but it was also a consulting firm. In time, the consulting portion of the business was responsible for the bulk of the company’s profits, driving their desire to separate from the accounting audit business. At this time, the two sectors became separate business entities, the Arthur Andersen name staying with the accounting firm and the consulting firm taking the …show more content…
It’s my belief that an Enron type scandal can occur again if the same type culture is present. While there have been many regulations set in place to prevent such scandals from occurring, namely the Sarbanes Oxley Act, I believe that if a company allows the same type of corporate culture to present itself there is nothing that can truly stop such fraud. My hopes are that there are now enough regulations and “obstacles” in place that no company will have the ability to disguise their fraud for as long as Enron did, therefore preventing the reach of Enron. It is also important for analysts and stockholders to be involved and educate themselves on the public information available regarding their investments. Such involvement is a necessity in preventing another Enron scandal. An added necessity is independence and segregation of duties. Auditors and boards of directors must be independent to ensure such fraud cannot go undetected. If these safe guards are in place, it’s my belief that a scandal the size of Enron will not have the ability to …show more content…
As I stated earlier, it is almost laughable that such values were included in their code of ethics. It’s my firm belief that if Lay, Skillings and Fastow had upheld these beliefs that the corporate culture at Enron would have been significantly different. Instead greed, arrogance and pushing the envelope were the driving factors for top executives, which poisoned the culture of the company and many that dealt closely with Enron. The people in a corporation are what can make or break the company. My hope is that the public, our government, and companies around the world can see how detrimental a poisoned corporate culture can be to a company’s