The Enron Disaster

In: Business and Management

Submitted By trevamay1
Words 301
Pages 2
The Enron disaster resulted in $66.4 billion dollars of losses to shareholders and 6,100 losses in jobs. Arthur Anderson LLP played a major role in the demise of this billion dollar company. Arthur Anderson provided auditing services for the Enron firm as well as consulting services. Due to Arthur Anderson’s failure to properly audit the Enron Corporation, Enron fell under criminal investigation. Author Anderson negative contribution of auditing services ultimately caused a chain of events that eventually caused Enron to disappear. Instead of Author Anderson focusing on the interest of the public and the shareholders, Author Anderson focused on increasing its revenues and maintaining the relationship of their clients. And after Enron was further investigated, it was found that Author Anderson’s behavior was the same for other company’s such as Waste Management, World Com and Sunbeam, all of which suffered similar fates as Enron. If Author Anderson would have corrected the flaws within their internal controls, Enron and the other companies may still be in operation today. For example, Author Anderson allowed David Duncan who was a partner in charge of the Enron account to overall the decision of a quality control officer. This put the entire company at risk because a vital company decision was made based on increased revenue rather than the best interest of the public. Also, AA elected Joe Berardino as the company’s CEO. Joe Berardino is known for being driven by increased revenues; therefore he did not make decisions nor act in the best interest of the public. Auditors should always make decisions in the public interest rather than the interest of management or current shareholders because by doing so the company is in compliance with the GAAP. Also the primary interest of the public and the reputation of the company are protected.…...

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