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The Demise of Arthur Anderson


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Learning Team Reflection - The Demise of Arthur Anderson
Team A: Alex Raye, Chai Gallahun, Frank Hagan, and Leonard Hollomon
FIN 571
December 14, 2015
Dr. Robert Mayfield

Learning Team Reflection - The Demise of Arthur Anderson
Business ethics set a standard for businesses to conduct their affairs with internal and external stakeholders. Corporate ethics allows individuals to scrutinize and self-correct the ethical values and morals of a business. The purpose of this paper is to discuss the mistakes detailed in the Ethics case, “The Demise of Arthur Anderson” and identify the potential actions that leadership could have taken to prevent this organizational failure. The firm committed several errors that could have been prevented through adherence to established ethics and practices. A major accounting firm since 1918, it has become a sad ending for a once powerful corporation.
During the 1980’s, changes in business required many organizations to branch out and diversify their business capabilities. Arthur Anderson was no exception to this having operated an accounting practice for some time, they branched out to grow their consulting practice. Many times, these services intertwined and created a conflict of interest that affected their decisions when auditing so not to upset the delicate balance while keeping their businesses growing. At times, the choices that were made where unethical and violated guidelines put in place to prevent accounting scandals.
These practices were no secret as they extended up to senior management. It’s stated in the article how one member of Anderson’s Professional Standards Group raised concern regarding clients accounting practices; they were removed from that group as a result of a request from that client. During our team discussion, one member held the opinion that “Arthur Andersen should have followed the GAAP

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