DiscussionAssignmentUnit2.docx - CONFLICT OF INTEREST Introduction Oversimplifying the case of Enron and Arthur Andersen Enron was using some accounting

DiscussionAssignmentUnit2.docx - CONFLICT OF INTEREST...

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CONFLICT OF INTERESTIntroductionOversimplifying 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 requiringand 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.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 Enron. 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 Enron that was not reported by Arthur Andersen, its external auditor. Enron was one of Andersen’s biggest clients receiving $1 million dollars a week in audit fees. Enron also pays fees Anderson for consulting services via Accenture. This is my view represent a conflict of interest because Andersen offers Enron both audit and non-audit service which could easily compromise the quality of audit service done by Arthur Andersen for fear of losing Enron as a client. Also, because Enron is in the energy industry, Andersen has also benefited by making 80 percent ofthe companies in the oil and gas industry its client, this also represent another conflict of interest because Anderson will clearly not want to lose these clients by disassociating with Enron by reporting its false accounting practices because according to former Andersen’s
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