The Ethics And Financial Collapse Of Enron Essay

725 Words Nov 6th, 2016 3 Pages
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 name Accenture. During this time and after, the companies focus shifted to revenues. Revenues became the driving force for many partners and their individual branches. Retaining clients meant a continued revenue stream and this became of major importance to the auditing firm. Enron was a major client for AA, and a loss of such a large client would be detrimental to the firm and partner’s success. The partner is who oversees the audit, the person who can override the auditor’s rulings, is also the person with the most to gain or loss in terms of profits – this caused a major flaw in internal controls for AA. A culture driven by profits played right into the goals of Enron’s top management. AA was so driven by profits that they were too…

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