Enron Corporation and Andersen, Llp Analyzing the Fall of...

The case of Enron Corporation and Andersen, LLP can be noted as one of the most infamous fraud scandals in US history. Investors lost millions of dollars and ruined the public’s trust. Enron was once the seventh largest public company in the United States and Andersen LLP was the world’s largest and most respected business organizations. Enron’s stock prices soared to approximately $100 to less than $10 in 2001. How did these two big giants fall into oblivion and what could have been done to avoid the disaster of these companies? Enron Corporation was formed as the result of the July 1985 merger of Houston National Gas and InterNorth of Omaha, Nebraska. Their headquarters were located in Houston, TX. In its earlier years, Enron was a†¦show more content†¦As a result, Enron filed for bankruptcy To make matters worse, when Andersen found problems in the financial statements, they didn’t make corrections due to a conflict of interest. The concern was that if Andersen brought these problems to light, Enron would walk away and cost Andersen millions of dollars in the long run. Andersen contemplated dropping Enron as a client, but did not follow through with it. Because the audit and consulting was done at the same firm, it clouded Andersen’s judgment. Andersen employees in Houston began shredding documents and therefore brought obstruction of justice charges that destroyed the firm. There were many issues in this case but one of the main issues that stood out was the fact that Andersen there was a conflict of interest because Andersen was the auditor and consultant for Enron. There are positive attributes when auditing and consulting at the same time for a client such as building a relationship with the client and promotes business; allows the auditor to become familiar with the clients’ business environment, and reduces the overall cost of the client. However, when a firm audits and consults for their client, the audit/consulting firm works so closely to the client that it makes ethical decisions very difficult to make and the auditors lose objectivity and become partial due to the conflict of interest. According to PCAOB Auditing Standard No. 9, Audit Planning, Section 3), â€Å"Every man whoShow MoreRelatedWaste Management33554 Words   |  135 Pagesaccounting fraud and auditor legal liability c a S eS inc lu de d in t hiS Se ction 4 89 99 4.1 Enron Corporation and Andersen, LLP Analyzing the Fall of Two Giants . . . . . . . . . . . 4.2 Comptronix Corporation 4.3 Cendant Corporation . . . . . . . . . . . . . . . . . . . . . . Identifying Inherent Risk and Control Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 111 119 127 137 Assessing the Control Environment and Evaluating Risk of Financial StatementRead MoreSystem Audit12707 Words   |  51 PagesTelecommunications, Intranets, and Extranets: An audit to verify that controls are in place on the client (computer receiving services), server, and on the network connecting the clients and servers. And some lump all IT audits as being one of only two types: general control review audits or application control review audits. History of information technology auditing Information Technology Auditing (IT auditing) began as Electronic Data Process (EDP) Auditing and developed largely as aRead MoreManagement Course: Mba−10 General Management215330 Words   |  862 Pages(The)(Jim)(Davis)(Case) Morin−Jarrell †¢ Driving Shareholder Value I. Valuation 229 229 253 279 1. The Value−Based Management Framework: An Overview 2. Why Value Value? 4. The Value Manager Harvard Business Review Finance Articles Eclipse of the Public Corporation 308 308 323 323 330 330 Article How I Learned to Live with Wall Street Article Second Thoughts on Going Public Article Reed−Lajoux †¢ The Art of M A: Merger/Acquisitions/Buyout Guide, Third Edition 10. Postmerger Integration 336Read MoreStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 Pages1 Computerized Decision Making 194 Case Incident 2 Predictions That Didn’t Quite Pan Out 195 7 Motivation Concepts 201 Defining Motivation 202 Early Theories of Motivation 203 Hierarchy of Needs Theory 203 †¢ Theory X and Theory Y 205 †¢ Two-Factor Theory 205 †¢ McClelland’s Theory of Needs 207 Contemporary Theories of Motivation 208 Self-Determination Theory 208 †¢ Job Engagement 211 †¢ Goal-Setting Theory 212 †¢ Self-Efficacy Theory 215 †¢ Reinforcement Theory 218 †¢ Equity Theory/Organizational