Anderson Case Study
1. Look up the term corrupt in the dictionary. What is the definition? Was corrupt appropriately applied to the actions of Andersen?
The dictionary defines corrupt as, “having or showing a willingness to act dishonestly in return for money or personal gain”. In the case of Andersen and Enron, the question of corruptness relates to the destruction of documents. While at first appearance it seems like an easy question to answer, many details come into play. The destruction of documents is a normal audit procedure used to protect the firm and company (client). Auditors are instructed to destroy any documents that are not needed. In the case of Andersen, this was a normal and legal policy. In …show more content…
Based on the facts of the case, no one individual or few individuals did anything outside of their job description. For example the company policy was to destroy papers not needed in an audit, the individually who destroyed them did not hide this from anyone or secretly destroy these papers. The question of corruptness in this case was not a question of individuals but of company wide policies. Should the company have been acting independently? Again, it was no individual who was doing consulting under the table; it was company wide and not a secret. Because Andersen’s employees were acting within the company’s ideas of fair and legal business practices (not KNOWINGLY misrepresenting facts), I think Andersen should be the target of investigation, not the individual employees.
4. Although Andersen’s conviction was over turned, do you believe that it’s employees acted in an ethical manner?
Audit firms are very important to our financial system and market. Without knowing that a company is accurately portraying its financials, it is impossible to invest wisely. In the case of Andersen and Enron, Andersen had a duty to society to make sure that Enron was fairly stating its financials. I believe that Andersen did not act ethically when making their decision about Enron financial position. There are a few major reasons why I believe Andersen was not ethical. The first is Andersen’s lack of independence. This is one of the major guidelines for audit