Essay About Andersen Firm And Enron Corporation

Case Enron Corporation
Case Enron Corporation
Case Enron CorporationQuestion 1All parties involved in the financial reporting and decision making process bearded certain levels of responsibilities for the disastrous events happened to not only Enron Corporation and Andersen Firm, but also to the entire accounting profession. However, the author believed that the executives in Enron Corporation in charge of preparing the financial documents were most liable for the crisis. It was their duty to ensure that the financial statements reported to the auditors were fair, accurate, and free of unreasonable misstatement. They failed their responsibilities by using hundreds of SPEs to obscure the true financial performance of Enron Corporation. Such practices were not up to the standards of honest financial reporting. Secondly, managements in Arthur Andersen made the decision to sign off the books and issue audit opinions in favor of Enron Corporation despite their questionable accounting and financial reporting decisions. Although the audit firm had no control over whether Enron Corporation adheres to the accounting rules, Arthur Andersen could drop the account to preserve the firm’s integrity. Third, the individual auditors simply complied with the managements decisions due to Andersen firm’s policy of “speaking in one voice”. Auditors should express their concerns when sensing an accounting malpractice, and if an auditor in the firm decided to be a whistleblower, the problems could be addressed early. At last, lack of supervision from the authorities also fostered the inappropriate behaviors of both Enron Corporation and Arthur Andersen.Question 3In the author’s opinion, Andersen violated a number of professional auditing standards in their services provided to Enron Corporation based on the evidences shown in Exhibit 3. First of all, Andersen was involved in a large number of activities outside of auditing, e.g., providing SPE structuring advice (