Andersen and Enron: A Question of Ethics

Paper Summary:

Accounting firm Arthur Andersen's recent involvement in the spectacular Enron scandal has raised a number of questions about whether accounting firms should act as consultants for the same companies that they audit. Clearly, Andersen's experience shows that is difficult, if not impossible, for an accounting company to avoid conflict-of-interest issues when acting as both a consultant and auditor for a single company. This paper paper shows that the conflict of interest is only one of the serious ethical issues faced by the business world in the past years. As such, clients and investors are becoming increasingly aware of ethical issues, a situation that makes reform in the accounting industry a necessity to ensure public confidence in the integrity of the accounting profession.

From the Paper:

"In examining only the behavior of Arthur Andersen, we run the real risk of losing sight of the larger ethical issues that are involved in the Enron fiasco. The behavior of both Arthur Anderson and Enron executives showed a shocking disregard for personal ethics, as well as professional standards, and corporate ethics. Jennifer Beever notes that the business world has responded by taking a renewed interest in the study of ethics. This is a marked difference previous standards of proper business behavior that adhered most strongly to the pursuit of self-interest (Beever)."

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