arthur andersen 1.2
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CASE ANALYSIS:ARTHUR ANDERSEN
Group 1: payal pachchigar(10MBA051)
Aditya Chate (10MBA011) Ankita Kahar (10MBA035)Navdeep Sahni (10MBA093)Kinjal Shah (10MBA099)
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Facts of the caseYEAR EVENTS
1913 Accounting firm Andersen,DeLanyand Company came itno existence
1918 DeLany left the company and thename changed to Arthur Andrsenand Company
1928 Financial consulting practicestarted
1947 Arthur passed awayLeonard Spacek took over assuccessor of Arthur
1954 Co. developed a separate unit forits consulting business
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YEAR EVENTS
1990 Enron hired Andersen as theiraccountants
1998 Waste Management Systemsscandal-client of Andersen
1999 Carl bass voiced concern over bookkeeping and was dismissed alongwith PSG (Professional StandardsGroup)
2000 Formal separation of consultingfirm and formation of Accenture
2001 Jospeh Berarndino was sworned asthe new CEO of the Co.SEC announced investigation of Enron
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Define the central issue/
problemWhere is the problem?
Wrong Auditing practicesManipulation of Accounts
Why is it a problem?
Money-centered executives
Identify the root causeMore money was involved
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For whom and why? (Goal vs. Performance)
Company because the problem affects their brandimage
Clients because they have to find new auditors
Potential Investors because they will have to reassesstheir decision for investing in the clients companies
Auditing and Accounting Industry as a whole becauseit will decrease the number of firms in the auditingindustry.
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What are the consequences?
Bankruptcy of client companies
Affects the faith of the potential investors
Top executives become rich
Brand image is affected
People employed will lose their job
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What information is lacking?
Are the client companies Private or Public Ltd.
Why Delany left the partnership
Reasons for Anderson s split up
What were the problems for handling the newconstituency
Unsuccessful in adopting new book keeping
system
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Id entifying alternatives
Training for new book keeping system
Monitor and Control
Transparency in system
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E valuation of alternatives
Give training to employees before adopting newsystem of accounting and auditing
Set up a regulatory body to monitor and controlthe events taking place in the company to avoidmanipulation of accounts
Develop transparency in the system to avoid theproblem
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S elect the best alternative
Monitor and control
Transparency in the system
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