Arthur Anderson case

Arthur Anderson case
Ideas and lessons
Arthur Anderson
• Once exemplified the rock solid character and
integrity that was synonymous with the
accounting profession.
• Accounting, auditing and consulting and
Arthur Anderson
Investors lost about $300 billion.
Hundreds thousands of people lost their jobs.
Closed 2002 after 90 years of business.
Auditing independence-what does it mean to
Independence vs combining auditing and
Arthur Anderson
• What is auditing main responsibility.
• What happens when growth becomes the
highest priority?
• Growth becomes the culture. Growth was
promoted and people who delivered big
accounts were promoted too.
• This was done at the expense of quality.
Arthur Anderson
• The company paid 100s of millions of dollars
to settle claims brought by clients and
• News that Enron had overstated earnings
became public, sending shock waves through
the financial markets.
Arthur Anderson
Arthur Anderson corrupted and got corrupted
1- Baptist Foundation of Arizona
2- Sunbeam
3- Waste Management
4- Enron.
5- and Telecoms and WorldCom
Arthur Anderson
Enron was forced to restate five years’ worth of
financial statements that Anderson had singed
off. Shredding Enron statements
Anderson CEO had viewed the $1 million a week
in audit fees from Enron paid to Anderson
along with the consulting fees it paid to
Anderson’s Spin off firm, Accenture, as a
significant opportunity to expand revenues at
Culture is what matters most!
• Growth and making short money was the only
language spoken at this big company with
many things to hide and cover up.
• Trust then, was destroyed.
• Billions of dollars were lost.
• Many people lost their jobs.
• Again distrust prevailed.
What is next
Corporate governance
Ethical lessons and education.
Social responsibility.
The stakeholder approach.
The system thinking and the long term view of
things and issues.
Good bye
Arthur Anderson
• How do you view such case?
• How did it affect your attitude?
• Do you view business differently after reading
this case?
• How?
• What ethical recommendations would you
give to people who are going to be managers,
or CEOs in the future?

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