Arthur Anderson: Questionable Accounting Practices - Term Paper Example

of ethical and professional misconduct as is the case with Arthur Andersen paves way to conflicts of interest and serious consequences such as lawsuits. This is well exemplified by Arthur Andersen’s case, as shall be seen in the ensuing discourse. There are accounting requirements and practices that organizations are expected to legally comply with, and these requirements are divided into five categories. These requirements are: the improvement of internal controls; the reinforcement of supervision against financial irregularities; the strengthening of financial disclosures; the strengthening of the independence of auditors; and the increment of penalties on legal and ethical misconduct.

Two of these five categories related to the Arthur Andersen case, specifically: the extension of incentives as a way of encouraging organizational compliance standards and programs; and protection of consumers. Nevertheless, all these requirements were intended for ensuring that people were not being exploited as a result of an organization’s business practices and were very significant to the Arthur Anderson case. The same are also intended for guaranteeing high financial and ethical standards during financial practices.

According to Carnegie (2011) and Thomas and Mark (2011), the legal and ethical issues surrounding Arthur Andersen’s auditing and accounting practice were characterized with accounting practices. These malpractices were mainly informed by conflicts of interest and the absence of independence of auditors when it came to auditing clients’ financial transactions and statements. These conflicts of interest always came into play whenever an individual was to choose between advancing his personal interests and group or organizational interests.

The concept of independence was to uphold integrity and objectivity during the auditing process and its absence also readily locked out objectivity and integrity. In respect to the immediately foregoing, one can