Essay About Major Accounting Firms Aid And Demise Of Arthur Andersen

Fin 571 Learning Team Reflection Week 2 – a Sad Tale: The Demise of Arthur Andersen
A Sad Tale: The Demise of Arthur AndersenDan Pritt, Janice Hill, John Mwaririe, Omar RomoFIN/571March 30, 2015John TriplettA Sad Tale: The Demise of Arthur AndersenIntro Major accounting firms aid and assist businesses of many sizes by offering audits, consulting, advisory, finance, and legal services. Many businesses rely on these accounting firms to make sure its paperwork, documents, and finances are reported and filed correctly. Because these accounting firms are dealing with the finances of a company, it is critical that strict codes of ethics are followed.  This paper showcases the demise of the Arthur Anderson accounting firm.Who- Arthur Anderson use to be one of the top five major public accounting firms until the late fall of 2002.  After the collapse of the firm, there were four major accounting companies left.  The graph below shows the top four public accounting firms today along with the number of employees.[pic 1]“Andersen was noted to be a man of principle and became an industry leader partly on the basis of high ethical principal and integrity” (Parrino, Kidwell, & Bates, 2012, pp. 122).  Anderson was a man of character, who placed a high importance on integrity and ethical behavior.  He did not succumb to the temptation of worshiping the almighty dollar and putting profits over people, ethics, and all else.What-  Unfortunately, the high ethical standards that were the bedrock foundation of the Anderson company crumbled over time after his death.  Other individuals that did not posses the same moral compass took control of the company.  They allowed profits and greed to take over and drive business practices.   One of the mistakes made by Andersen is that the audit relationship was an ideal link for selling consulting, which gave some consultants an incentive to sell more profitable consulting contracts (Parrino, Kidwell, & Bates, 2012).   This, of course, is a conflict of interest that should have never been allowed with an accounting firm.