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company, which was approved by SEC and the Arthur Anderson but can be very subjective and lead to fraud, as it shows the false financial results to the public. Enron booked potential future profits on the day a deal was closing. The Arthur Anderson Company, the company with the long history in audit practice was involved in the scandal, and played an important role in it because the company acted as an audit and consultant company for Enron. Profit was brought higher than the ethics in this case. Andersen hired Enron`s internal audit team, and together with its own team opened an office in the Enron`s headquarters, they attended its meetings and were shaping the new business. And here we can see the COI.What could have been done to avoid the conflicts of interest you identified?“Anderson turned in to internet audit team. A report by Enron’s law firm, who were investigating an employee’s allegations of improper accounting, concluded that Andersen auditors reviewed and approved of transactions by Enron-related partnerships that contributed to the company’s collapse” (Eichenwald, Oppel, 2002). Better was not to become a partner. The Enron`sstock price was inflated due to this partnership and transactions. The auditsby Andersen team were performed in the Houston and Chicago headquarters.
As we know from the story that the Anderson company hired the forty auditors from Enron, and became a partner in this ethical scandal. Andersoncompany shouldn`t do it. They had to provide the audit once a year and check the accounting issues of the Enron Company. But instead of this they literally expanded their duties.