The Enron And Arthur Anderson Scandal

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According to Ronald F. Duska and Brenda S. Duska, the auditing profession has come under extreme criticism since the Enron/Arthur Anderson scandal came to light. This scandal took the financial industry and the business world by surprise due to the respect and value that Arthur Anderson commanded at the time and also considering the size and magnitude of the client involved, Enron. Arthur Anderson was one of the big five accounting firms in the world who engages in financial audits world over. These audits to the financial statements of Multinational Corporation like Enron are done with a single core purpose in mind, which is to express an opinion on the financial health of the corporation. These opinions according to the authors are very…show more content…
The auditing profession by nature entails a person to be as trustworthy as they can possibly be since the need to be free from “undue influence” is not only expected but should exceed all expectations. The need for an auditor to have a clear mind, free from all distractions, can be compared to a surgeon attempting to perform a high-risk surgery where his actions would ultimately determine whether the person undergoing the surgery lives or dies. Saving lives is a universal principal and almost everyone acts upon it and so we have more lives saved than lost. Similarly stakeholders’ trust that auditors will act with integrity and honesty, which will enable them to see beyond the greed of money, therefore, act in the appropriate manner that will sustain the livelihood of the stakeholders. Relating to the importance of honesty, the authors highlighted Immanuel Kant theory, ‘Kant’s first categorical imperative, the universalizability principle: ‘act so you can will the maxim of your actions to be a universal law.’ Which supports the notion that it is also in the best interest for auditors to be ethical and trustworthy in order to sustain the functions of auditing. For example, if every auditor was to engage in dishonesty and unethical practices, they run a high risk of undermining the confidence and trust that stakeholders have placed on them. Without this public trust, the whole institution of
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