Rise Fall of Arthur Andersen, LLP - 1016 Words

March 4, 2014 Rise Fall of Arthur Andersen, LLP Abstract Enron was a natural gas company that was formed in 1985 by Kenneth Lay. By 1992, Enron was the largest selling company of natural gas in North America. In October 2001 a scandal involving Enron was emerging. This scandal led to the fall of the company. The Enron case and many others cases led to the collapse of other companies that did business with them which included one of the largest accounting firms in Chicago; the accounting firm of Arthur Andersen. This paper will discuss the rise and fall of one of Chicago’s top accounting firm and how greed and dishonesty can destroy and company and a good reputation.†¦show more content†¦Soon after Bernardino’s resignation WorldCom which was a major audit client of the Andersen Accounting firm admitted to cooking its books to the tune of $3.8 billion. This incident along with other Andersen clients began a wide range of investigations to come. (Chicago Tribune, 2002) Outcome After years of being developed into a successful accounting business in Chicago, a company that Andersen was involved with had a scandal brewing. This scandal went on to become one of the largest scandals in the business community. It stemmed from a company called Enron which was a natural gas company out of Houston, Texas. In November of 1997, Enron buys out a partner s stake in a company called JEDI and sells the stake to a firm it creates, called Chewco, to be run by an Enron officer. Thus begins a complex series of transactions that enable Enron to hide debts. In February 2001 a story breaks calls Enron a largely impenetrable company that is piling on debt while keeping Wall Street in the dark. August of the same year the CEO of Enron resigns. October 12 of the same year Arthur Andersen’s legal counsel instructs workers who audit Enron s books to destroy all but the most basic documents. By the end of the year the Securities Exchange Commission had launched an investigation on Enron and Andersen Accounting. The United States Justice Department went on to indict Arthur Andersen accounting firm of obstructionShow MoreRelatedCorporate Scandals and the Sarbanes-Oxley Act of 20023268 Words   |  14 Pagesas auditors to identify and prevent the publication of misrepresentations in the financial statements of the companies that they audited. The most commonly known accounting firm that was involved in the corporate scandals of the past decade is Arthur Andersen. These corporate accounting scandals resulted in costing investors billions of dollars when the share prices of the affected companies collapsed. In response to the public outcry regarding loss of investments through these scandals, Jain andRead MoreEnron Case7190 Words   |  29 Pagesbusiness in an unethical manner in its attempt to retain the loyalty of Enron executives. 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