close solutoin list

In 2001, Enron Corporation filed financial statements in which it did not consolidate various special purpose entities, thereby keeping large amounts of debt off its balance sheet. The company has since declared bankruptcy and admitted that it violated GAAP. Enron’s auditor, Arthur Andersen LLP, issued an unqualified audit opinion stating that Enron had followed GAAP. Instead, Enron should have changed its accounting principles to conform to GAAP, and Andersen should not have issued an unqualified opinion. The U.S. Department of Justice began an investigation of Enron and Arthur Andersen. Some employees of Arthur Andersen shredded certain documents related to the audit. As a result, the firm was found guilty of obstruction of justice and therefore was no longer able to perform audits. Only a few of the Arthur Andersen partners and employees were involved in the audit and even fewer in the shredding. However, thousands of Arthur Andersen employees lost their jobs. Required: From an ethical perspective, discuss whether the actions of the Department of Justice were fair with regard to the employees of Arthur Andersen.

BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 22, Problem 6C
Textbook Problem

In 2001, Enron Corporation filed financial statements in which it did not consolidate various special purpose entities, thereby keeping large amounts of debt off its balance sheet. The company has since declared bankruptcy and admitted that it violated GAAP. Enron’s auditor, Arthur Andersen LLP, issued an unqualified audit opinion stating that Enron had followed GAAP. Instead, Enron should have changed its accounting principles to conform to GAAP, and Andersen should not have issued an unqualified opinion.

The U.S. Department of Justice began an investigation of Enron and Arthur Andersen. Some employees of Arthur Andersen shredded certain documents related to the audit. As a result, the firm was found guilty of obstruction of justice and therefore was no longer able to perform audits. Only a few of the Arthur Andersen partners and employees were involved in the audit and even fewer in the shredding. However, thousands of Arthur Andersen employees lost their jobs.

Required:

From an ethical perspective, discuss whether the actions of the Department of Justice were fair with regard to the employees of Arthur Andersen.

Expert Solution

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Solution

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 22 Solutions

Intermediate Accounting: Reporting And Analysis
Show all chapter solutions
Ch. 22 - How is a change in depreciation method accounted...Ch. 22 - Describe a change in a reporting entity. How does...Ch. 22 - How does a company report an error of a prior...Ch. 22 - Describe two errors that affect only a companys...Ch. 22 - Describe two errors that affect only a companys...Ch. 22 - What is a counterbalancing error? Describe two...Ch. 22 - What is a noncounter balancing error? Describe two...Ch. 22 - Why does a company correct errors even after they...Ch. 22 - How does the accounting for an indirect effect of...Ch. 22 - If a company that uses IFRS discovers an error but...Ch. 22 - The cumulative effect of an accounting change...Ch. 22 - When a change in accounting principle is made...Ch. 22 - On January 1, 2019, Belmont Company changed its...Ch. 22 - A change in the expected service life of an asset...Ch. 22 - During 2019, White Company determined that...Ch. 22 - Generally, how should a change in accounting...Ch. 22 - On January 2, 2017, Garr Company acquired...Ch. 22 - A company has included in its consolidated...Ch. 22 - Shannon Corporation began operations on January 1,...Ch. 22 - Shannon Corporation began operations on January 1,...Ch. 22 - The two methods of reporting an accounting change...Ch. 22 - Heller Company began operations in 2019 and used...Ch. 22 - Refer to RE22-2. Assume the pretax cumulative...Ch. 22 - Refer to RE22-2. Assume Heller Company had sales...Ch. 22 - Bloom Company had beginning unadjusted retained...Ch. 22 - Suppose that Blake Companys total pretax...Ch. 22 - Bliss Company owns an asset with an estimated life...Ch. 22 - At the end of 2019, Framber Company received 8,000...Ch. 22 - At the end of 2019, Cortex Company failed to...Ch. 22 - At the end of 2019, Jayrad Company paid 6,000 for...Ch. 22 - At the end of 2019, Manny Company recorded its...Ch. 22 - Abrat Company failed to accrue an allowance for...Ch. 22 - The following are independent events: a. Changed...Ch. 22 - The following are independent events: a. Changed...Ch. 22 - The following are independent events: a. A...Ch. 22 - Change in Inventory Cost Flow Assumption At the...Ch. 22 - Fava Company began operations in 2018 and used the...Ch. 22 - Berg Company began operations on January 1, 2019,...Ch. 22 - Delta Oil Company uses the successful-efforts...Ch. 22 - In 2020, Frost Company, which began operations in...Ch. 22 - Gundrum Company purchased equipment on January 1,...Ch. 22 - Newton Company introduced a line of laptop...Ch. 22 - On January 1, 2014, Klinefelter Company purchased...Ch. 22 - The following are independent errors made by a...Ch. 22 - The following are independent errors made by a...Ch. 22 - Refer to the information in E22-13. Required:...Ch. 22 - The following are independent errors: a. In...Ch. 22 - Dudley Company failed to recognize the following...Ch. 22 - On January 2, 2019, Quo Inc. hired Reed as its...Ch. 22 - At the beginning of 2020, Flynne Company decided...Ch. 22 - Koopman Company began operations on January 1,...Ch. 22 - Schmidt Company began operations on January 1,...Ch. 22 - Since Goode Oil Company was formed in 2018, it has...Ch. 22 - Kraft Manufacturing Company manufactures two...Ch. 22 - Jackson Company has decided to issue common stock...Ch. 22 - At the beginning of 2020, Holden Companys...Ch. 22 - At the end of 2020, while auditing Sandlin...Ch. 22 - At the beginning of 2020, Tanham Company...Ch. 22 - A review of Anderson Corporations books indicates...Ch. 22 - Cask Companys bookkeeper, who has maintained its...Ch. 22 - Gray Companys financial statements showed income...Ch. 22 - Ingalls Corporation is in the process of...Ch. 22 - There are three types of accounting changes:...Ch. 22 - The various types of accounting changes may...Ch. 22 - Berkeley Company, a manufacturer of many different...Ch. 22 - When the FASB issues a new generally accepted...Ch. 22 - It is important in accounting theory to be able to...Ch. 22 - In 2001, Enron Corporation filed financial...Ch. 22 - You are auditing the financial records of a...Ch. 22 - Disclosures Obtain Kelloggs 2017 annual report...Ch. 22 - Obtain LVMH (Moet Hennessy 2 Louis Vuitton)s 2017...Ch. 22 - Sometimes a business entity may change its method...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
What is the purpose of a digital audit trail?

Accounting Information Systems

What kind of motivations do different employees have?

Foundations of Business (MindTap Course List)

REPLACEMENT ANALYSIS The Chang Company is considering the purchase of a new machine to replace an obsolete one....

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How should the cost of such activities as planting trees and shrubs be entered?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)