Conflicts of interest

Oversimplifying the case of Enron and Arthur Andersen, Enron was using some accounting practices that were
questionable. Because Arthur Andersen was an independent auditor, they were responsible for reporting any
questionable accounting practices might be risky to the shareholders of Enron. The Security and Exchange
Commission was responsible for requiring and publishing accurate information about Enron’s accounting
information. In the end, a few Enron employees went to jail, and Arthur Andersen stopped doing business
under that name.
Identify what you consider any conflicts of interest in the case of Enron and Arthur Andersen.
What could have been done to avoid the conflicts of interest you identified?
How would you change the laws to correct the problems that came up in the Enron and Arthur Andersen case?
Explore how Enron and Arthur Andersen might have been encouraged to act ethically other than direct legal
To what extent (if any) should sustainability concerns and issues be incorporated in accounting analyses?
When (if ever) should organizational decisions with sustainability-related impacts and significant associated
cost-implications (savings or expenditures) be shared with shareholders?

Sample Solution