Fall of Arthur Andersen


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BECG027 For delivery in electronic format: Rs. 400 ;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Joint ventures strategic alliances
Case Length : 15 Pages
Period : 1997 - 2002
Pub. Date : 2002
Teaching Note : Not Available
Organization : Arthur Anderson, US DOJ
Industry : Financial Services
Countries : USA

Abstract:

The case examines the emergence of Arthur Andersen as one of the leading auditing and consulting firms in the world, on the basis of its emphasis on integrity and ethics in business. The case explains the factors that led to deterioration in the firm's culture during the 1990s. It examines Andersen's role in accounting fraud at Enron, one of its major clients. The case also examines the criminal charges faced by the firm in the Enron case and how the Enron case eventually led to the closure of Andersen. The unethical practices of audit firms in the 1990s are also discussed. The case also takes a look at the various initiatives taken by the government and other regulatory authorities, such as SEC and AICPA, to restore the trust of investors in corporate firms and audit firms in the US.

Issues:

» Evolution of a large organization on the basis of integrity and adherence to professional standards

» The importance of ethics, integrity and professional standards in the audit business. The need to balance economic and social benefits in corporate decision making

Contents:

  Page No.
Grace to Disgrace 1
Background Note 2
The Fall - Was Andersen Guilty? 4
The Fall - Nailing Andersen 5
The Debate on the Role of Auditors 7
The Aftermath 9
Exhibits 11

Keywords:

Arthur Andersen, auditing, consulting, ethics, deterioration, culture, 1990, accounting fraud, Enron, clients, closure of Andersen, unethical practices, audit firms, 1990, government, regulatory authorities, SEC, AICPA

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