Disscussion11.docx - CONFLICT OF INTEREST Oversimplifying...

  • No School
  • AA 1
  • 3
  • 95% (21) 20 out of 21 people found this document helpful

This preview shows page 1 - 2 out of 3 pages.

CONFLICT OF INTEREST Oversimplifying the case of Enron and Arthur Andersen, Enron was using some accounting practices that were questionable. Because Arthur Andersen was an independent auditor, they were responsible for reporting any questionable accounting practices might be risky to the shareholders of Enron. The Security and Exchange Commission was responsible for requiring and publishing accurate information about Enron's accounting information. In the end, a few Enron employees went to jail, and Arthur Andersen stopped doing business under that name. Identify what you consider any conflicts of interest in the case of Enron and Arthur Andersen. What could have been done to avoid the conflicts of interest you identified? How would you change the laws to correct the problems that came up in the Enron and Arthur Andersen case? Explore how Enron and Arthur Andersen might have been encouraged to act ethically other than direct legal pressures. In this discussion, I will be reviewing the case of Enron and Arthur Andersen to identify if there were any conflicts of interest that resulted or encouraged the questionable accounting practices by Eron. I will be reviewing laws to correct the problems and finally exploring other non-legal options that can promote ethical behaviour. In the case of Enron and Arthur Andersen, there are a few identifiable conflicts of interest, which would have led to the questionable accounting practices by Eron that was not reported by Arthur Andersen, its external auditor. Eron was one of Andersen’s biggest clients receiving $1 million dollars a week in audit fees. Eron also pays fees Anderson for consulting services via Accenture. This is my view represent a conflict of interest because Andersen offers Eron both audit and non-audit service which could easily compromise the quality of audit service done by Arthur Andersen for fear of losing Eron as a client. Also, because Eron is in the energy industry, Andersen has also benefited by
Image of page 1
Image of page 2

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture