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Arthur Andersen accounting scandal.
Transcript of Arthur Andersen accounting scandal.
of federal charges Former CEO of Arthur Anderson, Joseph Bernardi went to jail Collapse of Enron affected the long term value of sharholder's investment Arthur Anderson allowed Enron to post great earning and profits growth Top executives made millions of dollars by tricking the public to invest in shares Top Executives used loopholes, special purpose entities and poor financial reporting to hide
billions of dollars in debt. The CFO misled board of directors and pressured Arthur Andersen to ignore the issue. December 2001: Enron filed for bankrupcy and the company failed Timeline name encompassing the massive umbrella organization convicted in 2002/ ruling reversed in 2005 expected to take until the late 2000s to complete Shareholder's lost almost 11 billion dollars when Enron's stock plumetted to under $1 Reputations of both companies lost Andersen's David Duncan ordered the shredding of thousands of documents. Arthur Andersen, LLP is a Certified Public Accounting firm that was in charge of auditing Enron's accounts/ finances and verifying they were accurate. -Enron's Auditor ordered Arthur Anderson to shred documents in accordance to their document retention policy.
-the SEC served Enron with subpoenas for records so Arthur Anderson ceased destroying documents. Kant and the Why does it matter? How do we determine who is responsible? - United States federal law which set new standards for all U.S. public company boards, management and public accounting firms.
-The bill was enacted as a reaction to a number of accounting scandals (Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom).
- The act contains 11 sections, ranging from corporate board responsibilities to criminal penalties.
-It created the Public Company Accounting Oversight Board, or PCAOB, which is in charge of overseeing and regulating and disciplining accounting firms/auditors of public companies.
-Title III consists of eight sections and mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports.
-Title VII consists of five sections and requires the Comptroller General and the SEC to perform various studies of accounting firms and auditors and then report their findings. Sarbanes-Oxley Act of 2002 What should be changed? Responsibilities of the firm Negative effects on the public categorical imperative Respect for public interest Arthur Anderson charges reversed in 2005 About Arthur Andersen. Arthur Andersen, based in Chicago, was one of the"Big Five" accounting firms. They provided auditing, tax, and consulting services to large corporations. 2002 In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accountants in the United States after being found guilty of criminal charges relating to the firm's handling of the auditing of Enron, an energy corporation based in Texas, which had filed for bankruptcy in 2001 and later failed. 2005 On May 31, 2005, in the case Arthur Andersen LLP v. United States, the Supreme Court of the United States unanimously reverted the chargers due to what it saw as serious flaws in the jury instructions. In the court's view, the instructions were far too vague to allow a jury to find obstruction of justice had really occurred. The court found that the instructions were worded in such a way that Andersen could have been convicted without any proof that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents. Since then... Since the ruling vacated Andersen's felony conviction, it theoretically left Andersen free to resume operations. However, the damage to the Andersen name was so severe that it has not returned as a viable business even on a limited scale. There are over 100 civil suits pending against the firm related to its audits of Enron and other companies. Its reputation was so badly damaged that no company wanted Andersen's name on an audit. Citations. ^ Ameet Sachdev (22 May 2003). "Conference center last resort for Andersen". Chicago Tribune. Archived from the original on 8 June 2010. Retrieved 2010-06-16.
^ Moore, Mary Virginia; Crampton, John (2000). "Arthur Andersen: Challenging the Status Quo" (.PDF). The Journal of Business Leadership (American National Business Hall of Fame) 11 (3): 71–89. Retrieved 2008-05-05.
^ Mitchell Martin (8 August 2000). "Arbitrator's Ruling Goes Against Accounting Arm: Consultants Win Battle Of Andersen". International Herald Tribune. Archived from the original on 2008-03-08. Retrieved 2008-05-05.