Running Head: Summary of A Sad Tale

Week Two Learning Team A
Summary of A Sad Tale
FIN/561
September 30, 2014
Read the Ethics case, "A Sad Tale: The Demise of Arthur Anderson" located in the WileyPLUS Week Fundamentals of Corporate Finance Chapter readings.
Discuss the mistakes made by Arthur Anderson and potential actions that leadership could have taken to prevent the organizational failure.
Write a 350- to 700-word summary of your discussion.
Click the Assignment Files tab to submit your assignment.
Team A,
You did a great job on the team paper! I like how you stated what caused the downfall and what the company should have done to fix the issue. You received a 4/4
Thank you,

Robert
Summary of A Sad Tale
This paper summarizes “A Sad Tale: The Demise of Arthur Andersen,” a consulting firm once known for its strong ethics, that was eventually destroyed by unethical practices. A discussion of the mistakes made by the organization, and what leadership could have done to help prevent the organization’s failure concluded with the following. According to dictionary.com, a consultant is a person who gives professional advice or services to companies for a fee (dictionary.com, 2014). Merriam-Webster.com states that an accountant is a professional person who performs accounting functions such as audits or financial statement analysis (merriam-webster.com, 2014). An individual giving professional advice to a company along with providing accounting functions and audits leads to a serious breach of ethics if they are acting for the same corporation. Arthur Andersen accounting firm turned out to be a breach of ethics and the crisis led to his downfall. Beginning in 1993, the company became a subject of an investigation because of their unscrupulous financial practices. A Sad Tale details the fall from of the once respected company. Arthur Andersen, the founder, always put his reputation above profit; however, after his death, individuals who lacked the same ethical backbone took control of the company and this is what eventually leads the company’s demise. Profitability became the focus of the organization, managers and workers alike had gone astray from the high ethical values and integrity that were embedded in the company since 1918. There were missed opportunities to prevent the demise of the organization. Great start to the paper! After the death of Arthur Anderson, what should his successor have done to ensure the same quality of work being performed in the organization?
Mechanisms that could have helped preventing organizational failure begins with leadership, they should have continued the high ethical values and instilled them in all employees. If managers enforced company policy along with putting a code of conduct in place, the culture would not have changed so drastically. Merging the consulting and auditing functions was a mistake, along with having people employed by more than one company created a conflict of interest leading to failure of the organization. Having employees, work at Enron was the first and a fatal ethical conflict for the organization. Another critical step is a simple one clear/proper communication. Communication is important within an organization, collaborating with employees about their expectations, goals, roles, and responsibilities are essential for an organization. Goals are essential and must support the organization’s mission and vision. The roles and responsibilities should be interconnected and employees should be familiar with their value and significance to the company. Expectations must be discussed so standards are maintained. The vision should be communicated so that employees understand the culture and values; in this case, the organizational ethical conduct. Arthur Andersen lost sight of the ethical values that company was based on from the start. Keeping an organization operating within ethical boundaries should be a priority. Great information above, which answered my questions above. I am a strong believer in communication. I feel that communication is the key to success in all organizations. Without communication, where does that lead the company?
Conclusion
Greed can lead to the downfall of an organization…how could a once regarded company like Arthur Andresen end up in a position where it no longer exists? Making poor choices and trying to expand to rapidly could make any organization end up the same way. In this example ethics was the downfall, by not sticking to the basic core values of the company letting profits drive the direction without consideration for the outcome led to the demise of the company.

References:

Dictionary.com. (2014, September 24). Retrieved from Dictionary.com: Dictionary.com
Parrino, R., Kidwell, D. S, & Bates, T. W. (2012). Fundamentals of corporate finance (2nd ed). Hoboken, NJ: Wiley
Merriam-Webster.com. (2014, September 23). merriam-webster.com. Retrieved from http://www.merriam-webster.com/dictionary/accountant