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Arthur Andersen Questionable Accounting Practices

Arthur Andersen: Questionable Accounting Practices

1. Describe the legal and ethical issues surrounding Andersen's auditing of companies
accused of accounting improprieties.

2. What evidence is there that Andersen's corporate culture contributed to
its downfall?

3. How can the provisions of the Sarbanes-Oxley Act help minimize the likelihood
of auditors failing to identify accounting irregularities?

Sunbeam Corporation: "Chainsaw Al"and Greed

1. How did pressures for financial performance contribute to Sunbeam's culture
where quarterly sales were manipulated to influence investors?

2. What were Dunlap's contributions to the financial and public relations embarrassments
at Sunbeam that caused investors and the public to question Sunbeam's
integrity?

3. Identify ethical issues that Dunlap's management team may have created by adopting
a short-run focus on financial performance. What lessons could be learned
from the outcome?

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Arthur Andersen: Questionable Accounting Practices

1. Describe the legal and ethical issues surrounding Andersen's auditing of companies accused of accounting improprieties.
The legal issues that surrounded Andersen's audition were that there was conflict of interest and there was lack of independence on the part of Andersen. In this context, Andersen took up lucrative management consultancy projects for the clients of whom it was the auditor.

From the deontological ethical perspective Andersen had the duty to report frauds committed by its clients. This is failed to do. This is an act that has little moral value from the perspective of virtue ethics.

2. What evidence is there that Andersen's corporate culture contributed to its downfall?

The evidence that Andersen's corporate culture contributed to its downfall is supported by the fact that Andersen took up lucrative management consultancy contracts from Enron. In addition, when Enron cam under investigation from the Federal authorities, Arthur Andersen shredded documents related to Enron. This incident shows that Andersen had a culture that contributed to its downfall. It actively contributed to obstruction of justice.

3. How can the provisions of the Sarbanes-Oxley Act help minimize the likelihood of auditors ...

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