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Business Economics: Arthur Anderson LLP - Assignment Example

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The author explains what actions he/she takes in response if he/she were the top partner at an accounting firm at that time of Andersen’s collapse. The author identifies whether the unethical conduct at Andersen was the fault of the AICPA for not setting higher ethical standards among its members…
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Business Economics: Arthur Anderson LLP
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Download file to see previous pages As a top partner at an accounting firm, I would put in place a high powered internal team that would have sweeping powers and would be responsible to study past failures, recommend and implement changes and more importantly, conduct a random or systematic 2nd round of auditing on team/partners/clients. (The Demise of Arthur Andersen, 2002)
2. Forbid team members and partners to work with clients with insider connection: Another major factor that was responsible for the lapse in adhering to the accounting standards was the fact that one/multiple members of the auditing team had professional and/or personal interests in Colonial Realty. This seriously diminished the willingness of the auditor to evaluate the financial reports with strict objectivity.
3. Closely monitor clients that are taking accounting as well as consulting services: Accounting firm offering consulting services derive significant synergies from the consulting services. Among others, cross-selling of services helps accounting firms increase their revenues and profits. Additionally, rapid change in business environment resulted in new forms of transactions, and hence an auditing firm needed more than just accountants - they needed computer professionals, lawyers, and management professional to understand and audit these transactions. However, offering both the services had one critical drawback- expected a conflict of interests. In effect, this turned into a case where one arm of a company, the auditing arm, would evaluate the other arm of the same company- the consulting services. This arrangement poses a significant conflict of interest. So, as a partner, I would propose to set up an independent team within the organization that will closely monitor deals where the client is offered both consulting as well as auditing services to minimize breach of regulations. ...Download file to see next pagesRead More
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