Transcript 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
independency.
Arthur Anderson
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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
you?
Independence vs combining auditing and
consulting.
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
investors.
• News that Enron had overstated earnings
became public, sending shock waves through
the financial markets.
Arthur Anderson
Arthur Anderson corrupted and got corrupted
by:
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
Anderson.
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
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Culture
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?