Week 2 Checkpoint - Unethical Practices of Arthur Andersen

Week 2 Checkpoint - Unethical Practices of Arthur Andersen...

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Week 2 Checkpoint – Unethical Practices of Arthur Andersen Melissa Krol 1. What did Arthur Andersen contribute to the Enron disaster? Arthur Andersen worked not only as auditors but as consultants also which created a conflict of interest. They approved the structure of Special Purpose Entities that did not meet the 3% equity-at-risk and decision control criteria for non- consolidation, failed to recognize the principle that prohibits recording shares issued as an increase in shareholders equity unless they are issued for cash, did not advise Enron’s audit committee that head decision makers were involved in conflict of interest situations, that Enron’s policies and internal controls were not enough to protect shareholder interests, and they also did not advise that transactions between Enron and the SPE’s were not in the interest of shareholders. These are just some of the mistakes that contributed to the Enron disaster. 3. What was the prime motivation behind the decisions of Arthur
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This note was uploaded on 09/06/2010 for the course ACC 260 acc 260 taught by Professor Unknown during the Spring '10 term at University of Phoenix.

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Week 2 Checkpoint - Unethical Practices of Arthur Andersen...

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