This presentation talks about how series of accounting frauds followed by Enron to WorldCom to sunbeam to waste management Inc. leads to shut down of one of the biggest audit firm that was Arthur Andersen.
This presentation talks about how series of accounting frauds followed by Enron to WorldCom to sunbeam to waste management Inc. leads to shut down of one of the biggest audit firm that was Arthur Andersen.
Enron Scandal from Auditor's Perspective (F-310) Pantho Sarker
This presentation is basically on the Enron's scandal. Here the maximum focus is given to auditor's role in this fraud. Moreover, the management's role is also highlighted.
Presentation on Enron Corporation Scandal.
The Presentation consists of Introduction, Rise, Fall, Impact, Methods of Accounting, Auditing Errors, Conviction, Changes after the Enron Scandal.
This presentation gives a detailed description about the one of the biggest frauds in the world, i.e, Enron Scandal. It tells you about the Enron Corporation and its rise. It also depicts the causes of downfall of Enron.
Review all the facts of the Enron case studyIdentify ethical issue.pdfdbrienmhompsonkath75
Review all the facts of the Enron case study
Identify ethical issues,
Determine the affected parties,
Develop possible solutions, and courses of action,
Assess the possible consequences of each proposed course of action,
1. Introduction
Although Enron went bankrupt and disappeared ten years ago, the impacts it has made on the
ethical standards never faded. It took Enron 16 years to go from about ten billion dollar assets to
more than sixty-five billion dollar assets, and took twenty-four days to go bankrupt. (McLean &
Elkind, 2004)
Enron, which once ranked as the seventh-largest company on the Fortune 500 and ranked as the
sixth-largest energy company in the world, on December 2, 2001, filed for bankruptcy protection
in the biggest case of bankruptcy in the United States up to that point (Jennings, 2009, p. 285).
By November 2001, the company’s stock, which once peaked at $90 US, was down to less than
$1 US. It was a disaster for the thousands of employees and investors (Skilling v. United States,
2010). Employees lost their jobs and pensions, and investors lost billions of dollars.
The Enron scandal is one that left a deep and ugly scar on the face of modern business. In this
article, the facts of Enron’s case were reviewed and the major ethical issues involved in Enron’s
scandal were analyzed. The rest of the paper is organized as follows. The second part is a brief
summary of what has happened in Enron. The third part described the role of Arthur Andersen
(AA) in the Enron scandal. In the following parts the culture of Enron, the important people
involved in this case, and also the major ethical issues about this scandal were analyzed. At last,
the conclusion part discussed what we should do to avoid another Enron.
2. Statements of Facts
2.1. A Brief History of Enron
Since found in 1985 as an interstate pipeline company, Enron had been a power supplier to
utilities. Its business began through the merger of Houston Natural Gas and Omaha-based
InterNorth. In the following 20 years, Ernon grew quickly and became the largest energy trader
in the world. By the end of the twenty century, Enron had many honorable titles, such as “one of
the world’s leading electricity, natural gas, and communications companies”, “the world most
admired corporations”, and so on. (Skilling v. United States, 2010)
In the following years, with the increase of competition, Enron decided to use diversification and
international investment to keep its market position. Actually, these activities brought Enron an
unexpected large amount of losses rather than profits. In 1999, after a foray into fiber optics and
the broadband market, which was a wrong decision again, Enron suffered too many substantial
losses and began bleeding quickly. However, Enron had never declared any information about its
losses until October 2001. Instead, in these years, Enron achieved a phenomenal bottom-line
through overstating revenues and hiding liabilities. For example, the revenue numbers fo.
Enron Scandal from Auditor's Perspective (F-310) Pantho Sarker
This presentation is basically on the Enron's scandal. Here the maximum focus is given to auditor's role in this fraud. Moreover, the management's role is also highlighted.
Presentation on Enron Corporation Scandal.
The Presentation consists of Introduction, Rise, Fall, Impact, Methods of Accounting, Auditing Errors, Conviction, Changes after the Enron Scandal.
This presentation gives a detailed description about the one of the biggest frauds in the world, i.e, Enron Scandal. It tells you about the Enron Corporation and its rise. It also depicts the causes of downfall of Enron.
Review all the facts of the Enron case studyIdentify ethical issue.pdfdbrienmhompsonkath75
Review all the facts of the Enron case study
Identify ethical issues,
Determine the affected parties,
Develop possible solutions, and courses of action,
Assess the possible consequences of each proposed course of action,
1. Introduction
Although Enron went bankrupt and disappeared ten years ago, the impacts it has made on the
ethical standards never faded. It took Enron 16 years to go from about ten billion dollar assets to
more than sixty-five billion dollar assets, and took twenty-four days to go bankrupt. (McLean &
Elkind, 2004)
Enron, which once ranked as the seventh-largest company on the Fortune 500 and ranked as the
sixth-largest energy company in the world, on December 2, 2001, filed for bankruptcy protection
in the biggest case of bankruptcy in the United States up to that point (Jennings, 2009, p. 285).
By November 2001, the company’s stock, which once peaked at $90 US, was down to less than
$1 US. It was a disaster for the thousands of employees and investors (Skilling v. United States,
2010). Employees lost their jobs and pensions, and investors lost billions of dollars.
The Enron scandal is one that left a deep and ugly scar on the face of modern business. In this
article, the facts of Enron’s case were reviewed and the major ethical issues involved in Enron’s
scandal were analyzed. The rest of the paper is organized as follows. The second part is a brief
summary of what has happened in Enron. The third part described the role of Arthur Andersen
(AA) in the Enron scandal. In the following parts the culture of Enron, the important people
involved in this case, and also the major ethical issues about this scandal were analyzed. At last,
the conclusion part discussed what we should do to avoid another Enron.
2. Statements of Facts
2.1. A Brief History of Enron
Since found in 1985 as an interstate pipeline company, Enron had been a power supplier to
utilities. Its business began through the merger of Houston Natural Gas and Omaha-based
InterNorth. In the following 20 years, Ernon grew quickly and became the largest energy trader
in the world. By the end of the twenty century, Enron had many honorable titles, such as “one of
the world’s leading electricity, natural gas, and communications companies”, “the world most
admired corporations”, and so on. (Skilling v. United States, 2010)
In the following years, with the increase of competition, Enron decided to use diversification and
international investment to keep its market position. Actually, these activities brought Enron an
unexpected large amount of losses rather than profits. In 1999, after a foray into fiber optics and
the broadband market, which was a wrong decision again, Enron suffered too many substantial
losses and began bleeding quickly. However, Enron had never declared any information about its
losses until October 2001. Instead, in these years, Enron achieved a phenomenal bottom-line
through overstating revenues and hiding liabilities. For example, the revenue numbers fo.
Read the Ethics case, A Sad Tale The Demise of Arthur Anderson .docxdanas19
Read
the Ethics case, "A Sad Tale: The Demise of Arthur Anderson" located in the
WileyPLUS Week Fundamentals of Corporate Finance Chapter readings.
Discuss
the mistakes made
by Arthur Anderson and potential actions that leadership could have
taken to prevent the organizational failure.
Write
a 350- to 700-word summary of your discussion.
A SAD TALE: The Demise of Arthur Andersen
In January 2002, there were five major public accounting firms: Arthur
Andersen, Deloitte Touche, KPMG, Pricewaterhouse-Coopers, and Ernst
& Young. By late fall of that year, the number had been reduced to
four. Arthur Andersen became the first major public accounting firm to
be found guilty of a felony (a conviction later overturned), and as a
result it virtually ceased to exist.
That such a fate could befall Andersen is especially sad given its early
history. When Andersen and Company was established in 1918, it was led
by Arthur Andersen, an acknowledged man of principle, and the company
had a credo that became firmly embedded in the culture: “Think Straight
and Talk Straight.” Andersen became an industry leader partly on the
basis of high ethical principles and integrity.
How did a one-time industry leader find itself in a position where it received a
corporate death penalty over ethical issues? First, the market changed.
During the 1980s, a boom in mergers and acquisitions and the emergence
of information technology fueled the growth of an extremely profitable
consulting practice at Andersen. The profits from consulting contracts
soon exceeded the profits from auditing, Andersen's core business. Many
of the consulting clients were also audit clients, and the firm found
that the audit relationship was an ideal bridge for selling consulting
services. Soon the audit fees became “loss leaders” to win audits, which
allowed the consultants to sell more lucrative consulting contracts.
Tension between Audit and Consulting
At Andersen, tension between audit and consulting partners broke into open
and sometimes public warfare. At the heart of the problem was how to
divide up the earnings from the consulting practice among the two
groups. The resulting conflict ended in divorce, with the consultants
leaving to form their own firm. The firm, Accenture, continues to thrive
today.
Once the firm split in two, Andersen
began to rebuild a consulting practice as part of the accounting
practice. Consulting continued to be a highly profitable business, and
audit partners were now asked to sell consulting services to other
clients, a role that many auditors found uncomfortable.
Although the accountants were firmly in charge, the role of partners as
salespersons compounded an already existing ethical issue—that of
conflict of interest. It is legally well established that the fiduciary
responsibility of a certified public accounting (CPA) firm is to the
investors and creditors of the firm being audited. CPA firms are
supposed to render an opinion .
this slide is for enron scandal.enron scandal details.famous audit scam in United States(US).for students/Professionals who are looking for a presentation on the topic Enron scandal
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2. ANDERSE
N
DELANY
& CO
Arthur E Andersen
Clarence DeLany
1913 1918
Clarence DeLany LEFT
Started
Name changed to
Arthur
DIED
1947
Leonard Spacek
Became the new
C.E.O
Andersen’s
disciple
1950
IT Revolution
Josef Glickauf
“father” of the
computer consulting industry
Andersen
Worldwide
ARTHUR ANDERSEN
ANDERSEN CONSULTING
1989 2001
Andersen Worldwide Scandal
3. Summary of the Case
After the Splitting of Andersen Auditing & Andersen Consultancy,
The Profits of the Consultancy Co Became a huge threat for the Auditing Co
1998 2x Performance policy has been Introduced to keep up with Auditing Co
Enron, the large energy corporation, has been a client of Andersen’s for 16 years
So, Adopted this Methodology to Enron, Cooked up Financial Statements for past 16 years
2001 Enron Declared 7.6 Billion $ loss In One Quarter (3 Months)
On Investigation by Securities Exchange Commission (SEC) of U.S.A
Enron was Found Guilty Andersen Auditing Co as a Culprit&
ventually, Andersen was charged with obstruction of Justice for manipulating the docume
Finally It has been Debarred from its 87 years of Auditing Services
Andersen Worldwide Scandal
4. ISSUES IN THE CASE
Evolution of a large organization on the basis of integrity and adherence to professional standards
Andersen Worldwide Scandal
More Than 85,000 Employees were Recruited
Less Experienced Candidates were encouraged
Retirement at 56 years Age was implemented
Removal of Experienced Potential
5. The importance of ethics, integrity and professional standards in the Audit business
Andersen Worldwide Scandal
$30 Million of self dealings by James Fastow (C.F.O)
$700 million of net earnings disappeared from Balance Sheets
$1.2 Billion Shareholders Equity disappeared from the Incomes
Over $4 Billion were in hidden Liabilities
6. The need to balance economic and social benefits in corporate decision making
Andersen Worldwide Scandal
Policy Formulation
Inclusive Growth
Social Justice
Resource Conflicts
Accountability
Sustainability
Transparency
7. Arthur E Andersen
Clarence DeLany
Arthur E Andersen Leonard Spacek
Enron, the large energy corporation, has been a client of Andersen’s for 16 years up until Enron’s 2001 bankruptcy
Think Straight, Talk Straight
Touch
Stones
of
Arthur
Andersen
Transparency
HonestyIntegrity
Andersen Worldwide Scandal