Arthur andersen scandal case study

Contemporary What Happened to Arthur Andersen? In the process, they instantly became the go-to case study for those aiming to show evidence of a correlation between criminal accounting and an inevitable demise. Arthur Andersen used to be one of the biggest accounting firms in the world.

Arthur andersen scandal case study

Worldcom Explain how the fraud triangle applies to the CEO and the Controller The fraud triangle consists of perceived pressure, perceived opportunity and rationalization. With Bernie Ebbers, the opportunity was clear. As CEO, he had the ability to order others in the organization to conduct acts that would result in the fraud, specifically the fake elements of the financial statements.

The pressure that Ebbers felt was that most of his wealth was in WorldCom stock. At the time the fraud began, the economy was entering recession and companies were beginning to reduce their telecom spending in particular.

The Enron Scandal & Ethics | Bizfluent

This was creating strong downward pressure on WorldCom stock, and consequently on Ebbers' wealth, and it was this pressure that was believed to be at the root of the fraud Crawford, Rationalization is a bit trickier.

Ebbers claimed that he didn't know about the fraud Crawford,which was untrue, so in such a statement really does not reveal his perspectives on how the fraud was rationalized. It might have been as simple as "I'm keeping the stock afloat.

For him, the pressure was fairly obvious. He admitted publicly that "I was instructed by senior management to make entries for WorldCom's books to increase WorldCom's earnings, for which I knew there was no justification" Teather, Myers would have had opportunity to commit the fraud, in his role as controller, especially knowing that the CEO and CFO were involved in the fraud — they would not punish him for the act.

Rationalization for Myers appears to have been more of a "I was following orders" sort of rationalization, which he was unable to sustain, and he would eventually become a witness against the senior executives in the case.

Arthur andersen scandal case study

In what ways did Bernie Ebbers try to rationalize his behavior In his testimony, Ebbers claimed that he did not know about the fraud. His defense was focused on this argument, that he didn't know about the fraud and that he had limited knowledge of accounting.

On the former point, Ebbers argued that he relied on his finance team to keep him informed of financial issues Hamilton, This is really not a rationalization at all, because Ebbers does not believe it.

A true rationalization is not how Ebbers attempts to explain to others, but how he explains his behavior to himself, and that did not come out in the trial.

The excuse that Ebbers offered up failed, and with good reason. First, the CEO's job is to know what's going on with the company, so even if accounting cooked the books, he should have been able to recognize that.

Second, others testified that Ebbers orchestrated the entire thing.

Arthur andersen scandal case study

Third, Ebbers didn't need to know anything about accounting to pressure the accounting team to cook the books. He could simply tell them to do it; he does not have to tell them how.

Thus, that line of reasoning is based on fallacious logic. An effective defense might have offered up some acceptance that he did wrong, and aim for a lighter sentence, but this tactic smacks of someone who thought he could just get away with it.

Case Details:

However Ebbers sought to rationalize the fraud to himself, it would not have been correct, because Ebbers would have been fully aware of what accounting fraud is. He knew that what he was doing was wrong, but decided that he felt pressure from analysts to keep hitting revenue and earnings targets or face a downgrade that could harm the stock's price.

How would owning and operating a small family business, create potential….Jean Caragher, president of Capstone Marketing, which specializes in CPA firms, said that Arthur Andersen is an interesting case, because the damage to the brand in the wake of the Enron scandal .

The main purpose of this paper “Arthur Andersen after Enron Scandal” is to analyze the Arthur Company in Chicago looking at its progression The main purpose of this paper “Arthur Andersen after Enron Scandal” is to analyze the Arthur Company in Chicago looking at its progression Enron Scandal Case study.

It is a well recognised fact. Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations.

The following is a case study on the fraudulent activities behind the doors of WorldCom, the second largest telecommunication firm in the USA.

Questions on why, how, where and who was involved in this scandal always cross the minds of business and common people at large. Capstone Case Study – Arthur Andersen LLP Individual Project Capstone Case Study – Arthur Andersen LLP Bus – Economics for Business Decisions Summer Discuss the environmental, strategic and organizational changes that occurred over the life of Andersen in the context of figure Mar 12,  · The Enron scandal, publicized in October , eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur.

Waste Management Scandal