Arthur Andersen Essay - 1532 Words

1. For nearly 90 years, Andersen had a culture of doing the right thing. Moral courage defined the organization. However, there was a gradual erosion of the culture. Name three cultural changes that contributed to Andersen’s problems and defend your position. The first cultural change was that Andersen embarked on a path that valued consulting service which charged hefty fees ahead of auditing in 1990s. Compared to its original major service, auditing that required accountants to insist independence of judgment, consulting should cater to clients’ requirements and fix problems from client’s perspectives. The situation that two roles mixed in Andersen made top managers decide to sell more consulting service which earned higher profits.†¦show more content†¦Assigned auditors were more than aware of the accounting misrepresentation of financial statements, overstating net income. Still instead of walking away from the client and resign, Andersen in pursuing short-term goals stayed with the company and moreover played by the Giant’s rules. More and more accounting firms at that time started to provide consulting services along with auditing to the same companies which always indicates a conflict of interests. Aud itors are the guardians and rules players where consultants are giving advices and showing how to avoid some accounting oversights. Andersen also in order to make good profits stepped on the side of combining two contradicting to each other services. Waste Management had lots of former Arthur Andersen employees which also led to close ties between two companies. That situation undoubtedly led to inability to turn down fraudulent accounting practices Waste Management was exercising at that time for a long period of time. Arthur Andersen auditors continued signing off with unqualified opinions. Of course, in a long run misstatement or misrepresentation of true financial situation of waste hauler would lead to a company’s inability to pay its debts and go bankrupt. In this case, and, unfortunately, many more others, Arthur Andersen pursued short-term goals of making good profits since Waste Management was one ofShow MoreRelatedArthur Andersen Case2216 Words   |  9 PagesOverview In order â€Å"to offer high-quality accounting services†, Arthur Andersen (AA), a Northwestern accounting professor started a business to offer services to clients promoting â€Å"integrity and sound audit opinions over higher short-run profits†. The company’s â€Å"four cornerstones† was good service, quality audits, well-managed staff, and profits for the firm. Their strategy was to focus on quality and high standards of audits rather than profits, a very successful strategy that led to consistentRead MoreArthur Andersen Case2098 Words   |  9 Pages1. 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