Arthur Andersen: Failure to Report Accurately
Author Andersen provided both consulting and auditing services which created an inherent conflict of interest. On one hand, Andersen was auditing an Enron financial recording system and strategy based for the most part on the advice of its own consultants. Evidence eventually surfaced that some internal …show more content…
There were many stakeholders impacted by the scandal. Of course Author Andersen, the auditing and consulting firm and its employees are impacted. The Enron Corporation because it is the primary business entity involved in the questionable practices, its employees who are impacted because of what the corporation they work for has done and the long-term impact this has on their future, shareholders who aspect the corporation to make the right decisions that keep its stocks and growth at a place that provide reasonable returns on their investments. The senior managers were also key stakeholders at Enron, Jeffrey Skilling (CEO), Ken Lay (chairman) and Andy Fastow (CFO) and have responsibility devising vehicles for deceptive financial practices. The legal firm of (Vinson & Elkins) and Investment firm (Merrill Lynch) who were associated with Enron, as well as, the corporate community as a whole and last but not least, the board of directors who should have been monitoring more closely and questioning the activities associated with the unprecedented success of the firm initially.
There are several courses of action that could be taken to limit and/or eliminate the potential conflict of interest that could exist when the same firm is conducting audit and consulting functions for the same company. One course of