Paul writes in 1 Timothy 6:10 (KJV), “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” The accounting firm of Arthur Andersen exemplified this statement completely. The firm which began in the early 1900’s as a stalwart defender of ethical behavior, by the beginning of the twenty-first century was more corrupt than anyone could imagine. The fallout from the demise of Arthur Andersen has been immense and some lasting effects can still be felt today.
Ultimately, the downfall of this accounting giant was due to the degradation of leadership. Schein states there are “six primary embedding mechanisms…that leaders have available to
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In addition, WorldCom's misconduct may have been intended to harm competition by inducing exit (or forfeiture of market share) by the efficient rivals” (Sidak, J. G., 2003). Not only did the collapse of WorldCom cost its own shareholders billions of dollars, the effects were felt throughout the entire telecommunications industry by shareholders of competitor companies. Ultimately the price of failure is paid by everyday people, the shareholders who invest their money in the company trying to create their own American dream only to see it turn into a nightmare.
While it is true that companies like Enron and WorldCom bear the responsibility of their failure, Arthur Andersen is also culpable in their demise as well. Arthur Andersen was tasked with the responsibility of protecting investor interests. Unfortunately, the accounting firm lost sight of their responsibility and fell victim to greed. The firm’s management shifted emphasis from quality of service to quantity of fees. Arthur Andersen was ultimately convicted of obstruction of justice. However, that conviction was overturned in 2005 (The Practical Accountant, 2005). Arthur Andersen did not act alone in these debacles, but it was their job to prevent this financial devastation, not to be an active participant in creating it. References
Arthur Andersen files appeal;. (2002, November). Accountant,P. 13. Retrieved September 14, 2011, from Accounting & Tax Periodicals. (Document ID: