...Wk2 checkpoint Read the Arthur Andersen’s Troubles Ethics Case on pp. 107–113 (Ch. 2) of the text. Answer questions 1, 3, and 4 on p. 113 in 200 to 300 words. When responding to question 3, focus solely on the Enron case. Questions 1. What did Arthur Andersen contribute to the Enron disaster? I found an article in Time Magazine that discusses the fact that Andersen employees followed instructions from Enron executives to destroy documents. The Wikipedia article that I found lists the fact that Enron’s “nontransparent” financial statements “did not clearly depict its operations and finances with shareholders and analysts”. Wikipedia also mentions complex business models and unethical practices, including a modified balance sheet so that it portrayed a more favorable depiction of its performance. 3. What was the prime motivation behind the decisions of Arthur Andersen’s audit partners on the Enron, WorldCom, Waste Management, and Sunbeam audits: the public interest or something else? Cite examples that reveal this motivation. It sure seems to me that at least in the Enron case, if Andersen’s employees destroyed documents as discussed, they were certainly not acting in the interest of the public. Actions like that could only be meant to help the company interest in attempting to avoid prosecution. Much less the possibility that financial documents were potentially modified to hide the real transaction histories. 4. Why should an auditor make decisions...
Words: 351 - Pages: 2
...Accurate information is the key to operating a business successfully and smoothly, and financial information is especially important to sustaining a company. This information is presented in the four clear and concise layouts of financial statements. Rather than combine all of a company’s financial information into a single, extensive report, the information is divided into Balance Sheets, Income Statements, Earned Income Statements, and Cash Flow Statements. Each of these provides important details relating to the overall health of the company’s financial standings. The Balance Sheet is a basic report of a company’s assets and liabilities, which allows the reader to see what the company is worth by showing what is owned and what is owed. This information is important to creditors and investors because a company can appear to be doing well but in reality, it could be drowning in debt with no viable way to pull itself out. When a company has few assets and high liabilities, it could signify a company that is in trouble, or it could be evidence of expansion. For internal use, this statement helps management to see their current financial state and make payments and collections accordingly to bring their accounts current. Whatever it is used for, this information is vital, but it is important to analyze this information in conjunction with the other financial statements to determine if a company can recover from a period of high liability. Income Statements provide...
Words: 823 - Pages: 4