Broken Trust: Enron Case Assignment

Broken Trust: Enron case
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Course
Date
What was Arthur Andersen’s role in Enron’s demise and how was their objectivity as the company’s external auditor compromised?
Arthur Andersen was negligent in overseeing the auditing of Enron’s financial reporting, which allowed Enron executives to perpetuate fraud on a massive scale. Arthur Andersen had not reported various Enron financial irregularities despite being auditor since 1985, and had instead helped to conceal the extent of liabilities (Nanda, 2002).
What is goal of the Sarbanes-Oxley Act and how is the business environment better for it since its passing in July 2002?
Sarbanes Oxley (Public Company Accounting Reform and Investor Protection Act), was adopted at a time when there were many corporate accounting scandals, and required the management/ corporate leaders to personally certify that the company’s financials were accurate and fair. Besides increased management responsibility to oversee the internal controls, the auditors were not to provide non-auditing work and had to report on potential conflicts of interest. Companies establish independent audit committees composed a Board of Directors, and who meet with the independent auditors, management and internal auditors, where they focus on the strength of the internal controls and discuss the auditing and financial reporting matte...