Case Analysis Arthur Andersen: Questionable Accounting Practices

1021 words 5 pages
Case Analysis
Arthur Andersen: Questionable Accounting Practices
Arthur Andersen LLP, which is over a span of nearly 90 years, would become one of the "Big five" largest accounting firms in the United States. Moreover, the accounting firm seen as the symbol of trust, integrity and ethic. The good reputation is derived from the advent of consulting business, which was developed by Leonard Spack. However, with the growth of consulting services, many accounting firms viewed it as a sccessful model that should be emulated, so that the competition pressure increasing sharply. Eventually, Andersen failed to withstand the pressure. Thus, it leaded to a negative influence on Andersen's Corporate culture, which enabled Andersen to be
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Improving the internal control. Auditors comment on the internal control of the firm should be reported. 2). Reinforcing supervision for financial irregularities. This act boosts to establish an independent the Public Company Accounting Oversight Board, which is responsible for overseeing the performence of the certified public accountants and the accounting firm. 3). Strengthening the independence of auditors. It means that the act restricts auditors to audit activities only. 4). Encouraging financial disclosure. It also provides whistle-blower protection. 5). Increasing the penalties of ethical and legal misconducts. There are severe monetary and criminal punishments imposed on those auditors that give false statements. Further, the act lays down the quality of auditing required, the quality of control, and independence standards and rules.

Summary ummary
In a whole, this case can be refined the following points: 1. Start with the background of Arthur Andersen LLP, the firm was once one of the “Big Five” largest accounting firms in the United States. And it gained a good reputation in the field of finance. 2. Since Andersen came up with the consulting business in 1947, it was developed to

be a greatly lucrative project. However, in 1999, Andersen chose to split its accounting and consulting function into two separate parts. Indeed, with the increasingly intense competition, Andersen,


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