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Arthur Andersen: Questionable Accounting Practices
Steven Young
Strayer University
Business Ethics: Ethical Decision Making and Cases
Dr. Mary Tranquillo
November 13, 2012

Arthur Andersen: Questionable Accounting Practices p1
Arthur Andersen, one of the largest accounting firms in the United States, “a name that was synonymous with trust, integrity, and ethics” (Ferrell, Fraedrich, & Ferrell, 2011, p. 348), through a loss of its founder Arthur Andersen, and change in its corporate culture resulting in many unethical business transactions that affected multitudes of primary stakeholders had to close its doors in 2002 after 90 years of business.
Review the mandated requirements for legal compliance (from chapter 4) and determine which requirements apply to the Arthur Andersen case. Explain your rationale
After re-reading Chapter 4 there are five areas that separate the mandated requirements for legal compliance, and I feel the that two apply to the Arthur Andersen case; the protection of consumers, and incentives to encourage organizational compliance programs. In the laws that protect consumers they require businesses to provide accurate information protecting them from financial scams, unfair, fraudulent, or deceptive practices. There are “Gatekeepers” that are in charge of that such as lawyers, financial rating agencies, and financial reporting services that help enforce high ethical standards. This was the issue wan Andersen as there were no such “Gatekeepers” or compliance programs so they used the loopholes to their advantage.
Discuss how the issues with the Arthur Andersen case may have played out differently if the Sarbanes-Oxley Act had been enacted in 1999.
The provisions of Sarbanes-Oxley Act help minimize the likelihood of auditor failing to identify accounting irregularities

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